“A  NATION'S  WEALTH  TOE  A NATION’S  NEED.’- 


OUR  CURRENCY: 

WHAT  IT  IS,  AND  WHAT  IT  SHOULD  BE. 

By  JOHN  O.  DREW. 


HON.  GEORGE  OPDYKE, 

A man  of  genius  enough  to  project  a thought  in  advance  of  his  time,  and  of  strength  sufficient  to  hold  it  firmly 

till  the  age  reached  it. 


'&XF7C 

INTRODUCTORY. 


* * * «<  I on]y  speak  right  on ; 

I tell  you  that  which  you  yourselves  do  know ; 

Point  to  sweet  Caesar’s  wounds,  poor,  poor  dumb  mouths, 

And  bid  them  speak  for  me.” 

The  writer  of  the  following  pages  was  educated  as  a merchant  in  that  Delphos 
of  financial  and  commercial  wisdom,  Boston  ; was  nurtured  in  the  lore  of  the 
oracles  thereof ; and  if  a year  since  the  idea  of  a currency  without  a gold  basis 
had  been  suggested  to  him,  he  would  have  thought  it  as  big  a blasphemy  as  his 
Puritan  ancestors  would  have  considered  the  suggestion  of  a universe  without  a 
God. 

The  report  of  the  Controller  of  the  Currency  of  December,  1 872,  showing  the 
strikingly  meagre  amount  of  our  currency,  contrasted  with  that  Of  other  productive 
and  commercial  nations,  arrested  his  attention;  and  as  point  after  point  of  our 
empiricism  developed  themselves,  he  felt  that  the  country  was  rapidly  tending  to 
suicide,  and  he  knew  not  that  one  person  existed  sympathizing  with  his  views. 

On  that  point  he  was  soon  undeceived,  and  found  that  intelligences  inferior  to 
none  had  long  preceded  him ; had  classified  facts ; and  for  the  first  time  in  history, 
a science  of  finance  had  been  evolved. 

Will  the  reader  please  ascribe  what  good  he  may  find  in  the  following  pages 
to  the  aid  received  from  the  published  works  of  the  following  named  gentlemen: 

Hon.  George  Opdyke,  author  of  a treatise  on  political  economy ; 

Hon.  Wm.  A.  Buckingham,  originator  of  the  bill  quoted  within  ; 

Wallace  P.  Groom,  Esq.,  editor  and  publisher  of  the  New  York  Mercantile 
Journal / 

Pliny  Freeman,  Esq.,  originator  of  the  first  practical  non- forfeiture  plan  of 
life  insurance,  which  has  saved  millions  of  dollars  for  our  American  widows  and 
orphans ; 

John  Earl  Williams,  Esq.,  President  of  the  Metropolitan  Bank,  New  York 
City ; 

Hon.  Alexander  Campbell,  who  was  one  of  the  first,  if  not  the  first,  to 
elaborate  these  problems ; 

Wm.  H.  Winder,  Esq.,  whose  investigations  of  the  money  history  and  legis- 
lation of  Great  Britain  from  that  memorable  Sunday  morning,  February  23d,  1797, 
when  the  King,  in  council,  ordered  suspension  of  specie  payments  until  June,  18th, 
1815,  when  the  nation  prematurely  resumed. 

If  aught  of  evil  appears,  let  it  be  ascribed  solely  to  the 


AUTHOR. 


Digitized  by  the  Internet  Archive 
in  2016  with  funding  from 

University  of  Illinois  Urbana-Champaign  Alternates 


https://archive.org/details/ourcurrencywhatiOOdrew 


MONEY— ITS  FUNCTIONS  AND  REQUIREMENTS. 

ANALYSIS  OF  THE  GREENBACK. 


THE  function  of  science  is  to  note  facts, 
and  from  them  learn  the  principles  which 
underlie  them. 

Tea-kettles  had  agitated  their  covers  for  ages 
before  James  Watt  looked  under  the  fact  and 
discovered  the  laws,  the  application  of  which 
multiplied  the  material  force  of  the  human 
race  indefinitely. 

Apples  had  dropped  since  the  days  of  Adam, 
but  it  was  reserved  for  Newton  to  learn  the 
cause,  and  therefrom  deduce  the  law  which 
impels  and  restrains  planets  in  their  spheres, 
and  gradually  drops  the  autumn  leaf  and  the 
snow-flake  to  their  resting-places. 

If  such  results  have  accrued  from  noting 
sizzling  tea-kettles  and  dropping  apples,  de- 
ducing causes  and  thence  arguing  to  further 
results,  is  it  not  possible,  with  the  chronicles 
of  the  past,  and  the  living  experience  of  the 
last  twelve  years  to  deduce  a Science  of  money  ? 
Let  us  try,  beginning  with  the  query — 
WHAT  IS  MONEY? 

The  Hon.  George  Opdyke,  eminent  as  a 
banker  and  political  economist,  defines  it  as 
“ an  instrument  of  commerce  designed  to  facilitate 
the  exchange  of  all  other  commodities  by  presenting 
an  equivalent  in  a portable  and  convenient  shape” 
Now,  let  us  try  to  learn  the  requirements  for 
its  most  perfect  usefulness.  We  find  them  to 
be — 

1.  Security , that  it  may  never  fail  of  ex- 
changability  for  equal  values. 

2.  Uniformity  of  value  in  every  part  of  our 
country. 

The  above  two  characteristics  inhere  fully 
with  our  present  currency.  The  following  are 
lacking,  and  if  they  can  be  supplied  we  shall 
have  a currency  more  perfect  by  far  than  any 
previously  existing,  and  developing  our  iudus- 
tries  and  commerce  in  as  great  a ratio  as  steam 
has  mechanics. 

We  believe  these  defective  points  can  be 
remedied,  and  a system  evolved,  the  operation 
of  which  will  be  in  accordance  with  known 
laws— where  science  will  take  the  place  of  em- 
piricism ; organization  be  substituted  for  spas- 
modic manipulation ; acting  as  automatically 
as  the  governor  of  a steam  engine. 

The  qualities  needed  by  our  present  currency 
are  these : 

3.  Stability , that  it  may  not  be  elevated  or 
depressed  by  outside  influences. 

4.  Elasticity , capable  by  its  inherent  power 
of  adapting  itself  to  any  requirement. 


5.  Cheapness , that  the  average  cost  of  its  use 
shall  not  exceed  the  average  value  of  its  ser- 
vice. 

6.  Volume , equal  to  any  conceivable  emer- 
gency. 

7.  Convertibility  into  such  form  as  shall  be 
perfectly  safe,  and  subject  to  satisfactory  con- 
version on  demand. 

I will  now  endeavor  to  show,  in  the  order 
above  quoted,  some  of  the  points  where  the 
deficiencies  show  themselves. 

LACK  OF  STABILITY  AND  ELASTICITY. 

The  peculiarities  of  our  climate  and  produc- 
tive industries,  especially  farming,  are  more 
exacting  to  a given  and  fixed  amount  of  cur- 
rency than  those  of  any  other  countiy. 

The  heat  of  our  summer  is  so  intense  that 
our  cereals  are  in  danger  of  damage  in  trans- 
portation, and  if  they  were  not,  our  farmers 
are  too  busy  in  their  fields  to  prepare  and 
cart  them ; many  factories  “ only  keep  their 
hands  along,”  and  merchants  and  bankers  take 
a holiday. 

The  functions  of  money  are  suspended,  and 
it  lies  inactive  at  three  per  cent,  per  year. 

September  shows  a change.  The  farmers 
have  “ laid  away  ” — that  is,  stopped  cultivating 
their  corn — thresh  out  their  oats  and  wheat, 
shell  last  year’s  corn,  and  push  them  toward 
the  seaboard,  gradually  hurrying  more  and 
more  as  the  advance  of  the  season  warns  them 
of  the  approaching  close  of  navigation,  which 
will  increase  their  cost  of  transportation,  while 
bad  roads  will  double  the  labor  of  hauling. 
Factories'work  into  the  night,  and  the  same 
amount  of  money  which  caused  a plethora  in 
the  summer,  is  found  to  be  totally  inadequate 
in  the  fall.  Rich  gamblers  see  it,  and  not  only 
make  “ corners  ” in  stocks  and  merchandise, 
but  also  in  currency ; and  this  is  the  second 
consecutive  year  our  country  lias  lost  millions 
of  dollars  in  credit  and  cash,  and  been  on  the 
verge  of  bankruptcy  for  want  of  money  to 
move  the  crops. 

The  lack  of  stability  and  elasticity  is  thus 
shown,  as  the  same  money  which  was  neglect- 
ed at  three  per  cent,  per  year  in  July,  is  in 
September  inadequate  to  the  demand,  even 
when  from  twelve  to  three  hundred  per  cent, 
per  year  is  offered. 

Hon.  George  S.  Boutwell,  ex-Secretary  of 
the  Treasury  of  the  United  States,  said  in  his 
report  of  December  2d,  1872 : 

“A  degree  of  flexibility  in  the  volume  of 


6 


currency  is  essential.  * * * There  is  a neces- 
sity every  autumn  for  moving  the  crops  with- 
out delay  from  the  South  and  West  to  the  sea- 
board, that  they  may  be  in  hand  for  export 
and  consumption  as  wanted.  This  work  should 
be  done,  in  the  main,  before  the  lakes,  rivers, 
and  canals  are  closed,  and  yet  it  can  not  be 
done  without  the  use  of  large  amounts  of  cur- 
rency. 

“ In  the  summer  months  funds  accumulate 
at  the  centers,  but  the  renewal  of  business  in 
August  and  September  gives  employment  for 
large  sums,  and  leaves  little  or  nothing  for 
forwarding  the  crops  in  October  and  No- 
vember. 

“ Nor  would  this  difficulty  be  obviated  by  a 
permanent  increase  or  a permanent  reduction 
of  the  volume  of  currency.  The  difficulty  is 
due  to  the  natural  order  of  things,  and  in- 
creases with  the  prosperity  of  the  country,  as 
shown  in  the  abundance  of  its  harvests.  * * * 
The  problem  is  to  find  a way  of  increasing  the 
currency  for  moving  the  crops  and  diminishing 
it  at  once  when  that  work  is  done.” 

We  propose  to  solve  Mr.  Boutwell’s  problem 
before  we  get  through. 

LACK  OF  CHEAPNESS. 

The  yearly  average  increase  of  our  property 
is  not  far  from  three  per  cent.  An  average  of 
higher  rates  argues  a merging  of  the  gains  of 
productive  industry  into  the  reservoirs  of  the 
capitalists. 

No  argument  is  required  to  show  that  if  the 
prevailing  rates  for  the  use  of  money  continue 
with  us  to  rule  from  two  to  five  times  those 
paid  by  our  competitors  across  the  water  in 
ship-building  and  all  other  productions,  no 
system  of  bonuses  or  tariffs  can  long  sustain  us. 

LACK  OF  VOLUME. 

When  the  ship-builder  designs  a first-class 
steamer,  he  does  not  calculate  on  the  mininum 
of  strength,  buoyancy,  and  engine-power  re- 
quired for  the  finest  summer  day,  but  imagines 
every  circumstance  of  wind,  sea,  and  lee  shore, 
learns  the  possible  maximum  requirements, 
and  adds  to  that  somewhat  for  mistakes  and 
flaws. 

We  perceive  from  the  shakiness  of  our  craft, 
in  what  would  ordinarily  be  considered  smooth 
water,  that  there  is  something  radically  amiss 
in  construction,  and  on  examining  models  and 
working  plans,  and  comparing  with  others, 
discover  some  of  the  defects. 

For  instance,  Mr.  Knox,  Controller  of  the 
Currency,  in  his  last  report,  page  8,  shows  the 
entire  circulation  of  the  nation,  December, 
1872,  on  population  of  1870,  per  head,  $20.48. 


If  we  add  10  per  cent,  to  the  population  for 
growth  in  three  years  (which  is  right,  as  we 
double  in  thirty  years),  and  deduct  the  bank 
reserves  of  October  3d,  1872,  we  find  currency 
per  head,  $13.67.  He  quotes  France,  same 
page,  per  head,  $25.05.  He  quotes  the  United 
Kingdom  (England,  Ireland,  and  Scotland)  at 
$19.48.  If  we  should  throw  out  Ireland  and 
Scotland,  which  have  but  little  money,  England 
would  stand  easily  at  $30. 

As  England  is  an  old  and  finished  country, 
and  we  are  just  building  ours,  as  a nation 
we  should  have  at  least  double  her  quota,  or 
30  X 2 = $60.  Again,  as  individuals  requiring 
comforts  for  ourselves,  and  education  for  our 
children,  that  should  again  be  doubled. 

This,  mind  you,  is  the  maximum — analagous 
to  the  outside  estimate  of  the  ship-builder  for 
strength,  buoyancy,  and  steam-power,  to  meet 
cyclones,  ice-fields,  and  lee  shores.  One-eighth 
the  amount  would  more  than  suffice  us  for 
January,  February,  June,  and  July,  in  ordina- 
ry years,  gradually  working  up  to  one-quarter 
or  one-half  the  amount  in  September,  October 
November,  and  December,  leaving  the  balance 
for  extraordinary  emergencies. 

LACK  OF  REDEEMABILITY. 

Practically,  this  lack  has  been  more  ideal 
than  actual,  as  the  greenbacks  are  legal  tender, 
and  all  have  been  eager  redeemers  with  all 
their  personal  and  pecuniary  resources ; and 
from  the  moment  of  the  demonetization  of  gold, 
and  their  taking  its  place  as  part  of  our  curren- 
cy, and  the  basis  of  the  remainder,  tlie3r  have 
been  fully  as  redeemable  as  gold  ever  was. 

But  we  propose  to  give  them  in  the  currency 
of  the  future  a power  which  gold  never  had  : 
the  option  of  the  holder  to  exchange  the  same 
at  par  for  United  States  interest-bearing  bonds 
— for  working  of  which  see  next  chapter. 

And  now  let  us  leave  the  unpleasant  task  of 
criticising  the  deficiencies  of  our  greenback 
currency — that  efficient  friend,  which  came  to 
our  rescue  when  all  else  seemed  to  have  de- 
serted us,  and  saved  the  Bepublic  for  us  and 
for  humanity. 

Let  us  learn  how  we  can  strengthen  and 
assist  it  on  its  great  mission,  and  send  it  on  its 
way  untrammeled  by  the  weakness,  the  bur- 
dens, and  the  blunders  of  the  past,  reinvigorat- 
ed, conquering  and  to  conqper,  until  all  the 
rough  places  shall  be  made  smooth,  and  the 
wilderness  blossom  like  the  rose. 

THE  CURRENCY  OF  THE  FUTURE 

will  be  the  theme  of  the  next  article  of  this 
series,  and  will  appear  in  our  next  number. 


OUR  CURRENCY— What  It  Is  and  What  It  Should  Be. 

STABILITY. 


E have,  as  a people,  demonstrated  the 
possibility  of  a “church  without  a 
bishop,  and  a state  without  a king.”  We  have 
also  created  a currency  without  a specie  basis, 
and  for  eleven  most  trying  years  it  has  proved 
the  best  the  world  has  ever  seen. 

Specie,  panic-struck,  hid  or  ran  away  the  first 
year  of  the  war.  The  greenback  bridged  the 
chasm,  and  when,  on  return  of  peace,  every- 
body anticipated  a recurrence  of  the  almost 
universal  ruin  which  followed  our  other  great 
wars,  we  moved  on,  to  the  astonishment  of  the 
world,  “ prospering  and  to  prosper.” 

It  was  a remarkable  fact  that  while,  at  the 
close  of  the  war,  we  moved  on  with  steady 
steps,  England  and  France  reeled  like  drunken 
men. 

The  reason  was  the  healthfulness  of  our  cur- 
rency, the  strength  of  our  money  system; 
healthy  because  detached  from  that  most  fe- 
verish of  all  money  elements,  specie;  strong, 
because  based  on  the  wealth  of  the  nation — its 
goodness  could  not  be  doubted.  But  in  all 
this  “ we  builded  better  than  we  knew.” 

When  Mr.  Chase,  repulsed  by  the  bullionists, 
issued  his  first  $20,000,000  greenbacks,  he  apol- 
ogized for  so  doing,  putting  in  the  plea  of  ne- 
cessity ; and  from  that  time  to  this  the  history 
of  our  currency  has  been  a series  of  temporary 
expedients,  compulsory  in  inception,  empyric 
and  spasmodic  in  execution. 

The  child  was  born  amid  the  sneers  and 
curses  of  our  enemies,  and  cold  shoulders  of  our 
friends.  If,  with  such  a birth  and  nursing,  it 
has  in  its  youth  been  an  angel  of  such  good- 
ness and  strength,  what  may  we  not  expect  of 
its  manhood,  if  cultured  with  better  surround- 
ings? 

In  our  last  we  demonstrated  that  the  ele- 
ments yet  required  to  perfect  our  currency 
were  stability,  elasticity,  cheapness,  volume, 
and  convertibility,  indicating  the  diagnosis  «f 
the  disease,  and  now  we  propose  to  discuss  the 
mode  of  cure. 

The  contemporary  of  Luther  learning  relig- 
ion only  in  an  unknown  tongue — the  Galilean? 
taught  only  from  the  venerated  Rabbins  at  the 
synagogues,  or  from  the  sanctimonious  Phari- 
see at  the  street  corners,  had  no  more  reason 
for  surprise — the  one  by  sermons  in  his  own 
vernacular,  the  other  by  the  eloquent  teach- 
ings of  the  trees  and  flowers— than  our  readers 


have  at  the  very  simple  prescription  for  all 
these  ailments. 

Let  Congress  pass  a very  simple,  and,  there- 
fore, easily-understood  law,  providing  for  the 
issue  of  treasury  notes  ( greenbacks ) as  legal  tender 
for  all  purposes  whatever , to  the  extent  which  the 
requirements  of  the  country  indicate , and  make 
such  legal  tender  reconvertible,  at  the  option  of  the 
holders,  into  Treasury  bonds  bearing  a rate  of  in- 
terest not  much  in  excess  of  the  average  annual 
national  increase  of  property — say  3.65  per  cent, 
per  year. 

This  involves  very  little,  if  any,  increase  of 
the  public  debt,  whether  as  represented  in  cur- 
rency or  bonds,  as  the  old  bonds  would  be  re- 
tired about  as  fast  as  the  new  ones  would  be 
issued,  and  a reservoir  would  thus  be  formed 
into  which  any  surplus  currency  which  might 
be  afloat  in  a time  of  business  inertia  would 
gravitate  as  surely  as  the  freshet  seeks  the 
ocean,  and  when  the  season  of  commercial  ac- 
tivity again  approaches,  as  certainly  as  the  sur- 
plus waters  of  the  spring-time  are  returned 
from  the  ocean  by  automatic  action  to  vitalize 
vegetation,  so  would  the  life-current  of  the  na- 
tion’s money  respond  to  the  demand,  again  to 
retire  to  its  resting-place  when  its  work  should 
be  accomplished. 

One  of  our  ablest  political  economists  (Wal- 
lace P.  Groom)  remarks : 

“ In  the  interchangeability  (at  the  option  of 
the  holder)  of  national  paper  money  with  Gov- 
ernment bonds  bearing  a fixed  rate  of  interest, 
there  is  a subtile  principle  that  will  regulate 
the  movements  of  finance  and  commerce  as 
accurately  as  the  motion  of  the  steam-engine 
is  regulated  by  its  ‘governor.’  Such  paper 
money  tokens  would  be  much  nearer  perfect 
measures  of  value  than  gold  and  silver  ever 
have  been  or  ever  can  be.” 

The  volume  of  our  currency  would  thus  reg- 
ulate itself  and  become  elastic  and  redeemable. 

The  constantly  increasing  burdens  of  the 
people  in  paying  rates  of  interest  dispropor- 
tioned  to  production  would  exist  no  longer, 
and  the  Government  would  realize  a large 
economy,  as  when  the  currency  was  out  it 
would  on  that  pay  no  interest,  and  when  re- 
turned for  redemption  into  3.65  bonds,  the  rate 
in  currency  wTould  be  much  less  than  it  now  is 
in  gold. 

The  nearest  approach  we  have  recently 


8 


made  toward  legislation  on  this  matter  is  as 
follows : 

On  the  7tli  day  of  January,  1873,  the  lion. 
William  A.  Buckingham  (Ex-Governor  of  Con- 
necticut, now  U.  S.  Senator  from  that  State)  in- 
troduced a bill  in  the  U.  S.  Senate,  extracts 
from  which  wc  give  below,  which  was  read 
twice  and  ordered  to  be  printed. 

It  was  called  up  three  days  after,  and  referred 
to  the  Committee  on  Finance,  which,  by  its 
chairman,  Mr.  Sherman,  reported  it  back  on 
the  16th  with  an  amendment,  striking  out  all 
after  the  enacting  clause,  and  inserting  matter 
of  an  entirely  opposite  and  mischievous  char- 
acter. If  my  memory  serves  me  correctly,  it 
was  then  “ laid  on  the  table.” 

Perhaps  it  was  necessary  that  the  evidence 
of  our  spring’s  and  autumn’s  history  should  ac- 
crue to  give  further  emphasis  to  the  words  of 
eloquence,  experience,  and  wisdom,  with  which 
the  distinguished  author  supported  his  bill. 

We  quote  below  such  portion  of  the  bill  and 
remarks  as  are  pertinent  to  our  present  subject 
matter  (the  parenthesis  and  italics  are  ours) : 

“ That  it  shall  be  the  duty  of  the  Secretary 
of  the  Treasury  to  issue  bonds,  as  herein  de- 
cribed,  of  denominations  not  less  than  one  hun- 
dred dollars,  and  legal  tender  notes  in  denomi- 
nations not  less  than  (five)  dollar(s). 

“That  United  States  legal  tender  notes,  in 
sums  of  one  thousand  dollars  and  its  multiple, 
shall,  on  demand  by  the  holder  thereof,  be 
redeemed  by  the  Treasurer  of  the  United  States 
(either  in  coin  or)  with  United  States  bonds, 
the  principal  of  which  shall  be  payable  on 
demand  in  legal  tender  notes,  and  the  interest 
on  which  shall  be  payable  semi-annually  (in 
coin),  at  the  rate  of  three  and  sixty-five  one- 
hundredtlis  per  centum  per  annum.” 

We  quote  extracts  from  the  remarks  on  the 
bill  by  Mr.  Buckingham. 

* * * “ The  industrial  interests  of  the  coun- 
try require  and  demand  a currency  elastic,  se- 
cure, and  convertible  into  that  which  is  of 
more  value  than  the  currency  itself.  A circu- 
lating medium  that  shall  combine  these  three 
qualities  wmdd  stimulate  our  energies,  increase 
our  commerce,  and  facilitate  exchanges  both 
foreign  and  domestic.  * * * The  experience 
of  more  than  three  quarters  of  a century  fur- 
nishes evidence  that  we  have  often  exerted  our 
energies  until  they  have  been  nearly  exhausted 
in  order  to  maintain  a system  of  specie  pay- 
ments which,  as  yet,  has  been  only  intermit- 
tent. * * * 

“ The  internal  commerce  of  the  nation  does 
not  absolutely  require  specie  resumption.  * * * 


In  looking  over  the  country  I notice  its  mar- 
velous progress,  and  when  I see  that  industry 
has  been  richly  rewarded,  and  that  nearly 
every  branch  of  business  has  been  productive 
of  profit  during' the  past  five  years,  I am  not 
so  ready  as  I have  been  to  curtail  the  currency 
by  an  arbitrary  statute  for  the  sake  of  deceiv- 
ing the  people  with  the  old  idea  that  banks 
can  always  maintain  specie  payments.  They 
have  not  done  it  heretofore,  for  when  the 
pressure  came  they  were  no  more  held  by  their 
obligations  to  redeem  than  was  Samson  held 
by  the  green  withes  of  Delilah.  Nor  am  I 
willing  to  wait  in  a state  of  inactivity  for  busi- 
ness to  increase  until  it  shall  make  coin  and 
paper  of  equal  value.  I would  lay  aside  a 
theory  which,  in  times  of  great  commercial 
embarrassment,  has  furnished  no  relief,  and 
try  the  more  excellent  and  practical  measure 
of  redeeming  circulation  in  United  States 
bonds.  * * * 

“ The  bill  at  first  will  cause  a demand  for 
bonds  in  exchange  for  legal  tender  notes,  but 
when  the  time  shall  come  that  an  increase  of 
currency  will  be  demanded  for  business  pur- 
poses, the  tide  will  change,  and  notes  will  be 
in  demand  for  bonds.  Bonds  will  be  exchanged 
for  notes,  and  notes  for  bonds.  This  inter- 
changeability, taken  in  connection  with  free 
banking  and  central  redemption,  makes  pro- 
vision for  an  elastic  currency — a necessity  long 
felt  but  never  secured. 

“ The  business  of  the  country  is  never  sta- 
tionary, but  is  always  contracting  or  expanding. 
When  it  contracts,  bonds  will  be  in  demand  ; 
when  it  expands,  currency  will  be  in  demand. 
Whenever  it  shall  contract,  a man  may  have  a 
surplus  of  capital  in  his  business  for  which  he 
will  seek  a temporary  investment.  The  bill 
offers  him  United  States  bonds  bearing  inter- 
est, and  gives  him  the  privilege  of  taking  back 
his  capital  whenever  he  shall  require  it.  The 
certainty  of  receiving  it  whenever  demanded 
will  make  it  for  his  interest  to  take  and  hold 
the  bonds  until  his  necessities  for  currency  are 
greater  than  his  necessities  for  interest.  On 
the  other  hand,  the  business  of  the  American 
people  will  vibrate  toward  the  other  extreme. 
Agricultural  products  must  be  moved,  labor 
on  unsold  manufactures  must  be  paid  for, 
stocks  of  merchandise  must  be  carried  over  a 
dull  season,  and  cornering  speculations  must 
be  prevented  without  depending  upon  adven- 
titious aid  from  the  Treasury  Department, 
which,  if  rendered,  will  in  the  end  prove  to 
be  unnatural,  impolitic,  and  inadequate.  This 
will  require  more  currency.  If  the  demand 


9 


shall  be  so  pressing  that  notes  will  be  of  more 
value  than  bonds,  then  men  can  obtain  them 
according  to  their  ability. 

“ Money  is  the  power  that  moves  the  com- 
merce of  the  nation.  No  Senate  can  deter- 
mine the  amount  that  will  be  required  until  it 
can  determine  the  nature  and  the  amount  of 
business  to  be  transacted.  This  bill  does  not 
propose  to  limit  either  the  power  or  the  busi- 
ness, but  to  adjust  the  amount  of  the  one  to 
the  necessities  of  the  other  upon  automatic 
principles,  so  as  to  make  use  of  all  that  shall 
be  necessary,  and  no  more.  It  will  act  like  the 
regulator  of  the  throttle-valve  attached  to  a 
steam-engine.  When  the  load  which  the  en- 
gine is  to  move  is  heavy,  the  valve  opens  and 
the  steam  presses  upon  the  piston  with  suffi- 
cient force  to  carry  it ; when  the  load  is  less- 
ened, the  valve  closes  and  the  power  is  not 
wasted.  So,  when  business  increases,  it  will 
open  the  channels  through  which  currency  will 
flow  so  long  as  it  shall  be  required,  and,  as  bus- 
iness contracts,  it  will  return  to  the  vaults  of 
your  banks.  The  exchange  of  bonds  for  notes, 
or  of  notes  for  bonds,  will  cause  no  excitement 
and  produce  no  panic  or  alarm,  but  will  meet 
the  ever-changing  conditions  and  demands  of 
business.  * * * Bonds  will,  at  times,  be 
worth  more  than  coin.  Again,  this  increas- 
ed demand  for  bonds  will  be  for  the  home 
market,  aud  save  a large  annual  drainage  of 
coin,  which  would  otherwise  go  to  pay  interest 
abroad. 

“ The  bill,  if  its  provisions  shall  be  carried 
out,  will  also  establish  our  system  of  banking 
so  firmly  upon  national  obligations  as  to  render 
the  payment  of  the  principal  unnecessary,  and 
relieve  the  present  generation  of  those  heavy 
burdens  of  taxation  which  it  has  borne  for 
years  past. 

“ Mr.  President,  I am  not  an  advocate  for  an 
inflated,  irredeemable  currency.  It  would  over- 
whelm every  industrial  interest,  and  bury  them 
in  ruin.  There  should  be  no  expansion  with- 
out provision  for  positive  redemption.  They 
are  practicable  measures  which,  if  incorpor- 
ated into  a public  act,  will  increase  the  value 
of  national  securities,  reduce  the  rate  of  inter- 
est thereon,  and  give  us  an  elastic  currency  re- 
deemable in  that  which  will  approximate  the 
value  of  coin  more  closely,  and  maintain  that 
value  more  uniformly  than  any  other  securities. 
Try  them.  They  will  produce  no  disturbance 
and  cause  no  alarm  in  financial  and  business 
circles,  but  their  influence  will  be  as  imper- 
ceptible, and  yet  as  real,  as  the  morning  light 
which  ushers  in  the  perfect  day.” 


Let  us  see  how  this  law  would  practically 
work  in  supplying  the  deficiencies  of  our  pres- 
ent (greenback)  currency,  considering  them  in 
the  order  quoted  above. 

Stability  would  be  insured,  as  our  currency, 
for  the  first  time  in  our  history,  being  entirely 
under  our  own  control,  and  based  solely  on  our 
own  property  and  production,  would  be  free 
from  the  “entangling  alliances”  of  the  past, 
which  have  hitherto,  in  matters  of  finance  and 
commerce,  bound  us  as  firmly  to  the  dictation 
of  Europe  as  if  the  Declaration  of  Independ- 
ance  had  never  been  proclaimed. 

This  is,  what  it  is  intended  to  be,  a startling 
statement,  and  if  it  is  enough  so  to  shy  our 
leaders  away  from  the  deep  ruts  of  the  past, 
we  shall  be  pleased. 

Let  us  see  if  it  is  substantiated  by  proofs: 

“ The  borrower  is  the  servant  of  the  lender,” 
is  a very  old  truism. 

Being  a new  country,  with  everything  to 
construct,  and  too  enterprising  and  impatient, 
as  a people,  to  wait  for  the  slow  accretions  of 
our  own  industries  and  gains  in  developing 
national  and  private  undertakings,  we  have  al- 
ways been,  are  now  more  than  ever,  and  for  a 
long  time  must  continue  to  be,  a debtor  nation. 
Gold  ever  has  been,  and  we  see  no  reason  why 
it  should  not  continue  to  be,  the  international 
regulator  of  exchanges  between  nations. 

While  we  fully  concede  to  it  this  interna- 
tional function,  we  do  not  admit  that  this  con- 
cession gives  any  claim  to  mix  in  our  internal 
money  relations.  The  shore  line  is  the  divis- 
ion. Our  legal  tenders  sustain  our  industries 
and  float  our  crops  to  that  line ; beyond  that 
all  is  international  and  subject  to  specie  liqui- 
dation of  balances. 

Indeed,  justice  to  our  creditors,  as  well  as 
ourselves,  would  indicate  that  the  small  amount 
of  specie  we  hold  in  our  own  right  should  be 
devoted  to  that  function. 

Bullionists  argue  that  gold  is  the  world’s  cur- 
rency, and,  therefore,  should  be  ours.  This  ar- 
gument on  their  side  is  not  worth  a row  of  pins 
— as,  if  it  proves  anything,  it  proves  that  we 
should  accept  monarchy,  nobility,  entail,  and 
primogeniture,  and  other  nuisances  which,  at 
much  cost  of  brains,  blood,  and  money,  we 
have  happily  shaken  off. 

We  freely  accept,  as  above  indicated,  gold  as 
an  international  regulator,  but  claim  a distinct- 
ive currency  for  our  domestic  use,  as  fully  and 
freely  as  we  claim  our  other  domestic  institu- 
tions. 

When,  by  reason  of  war,  financial  disturb- 
ance, or  any  one  of  a dozen  causes,  Europe,  our 


10 


creditor,  wants  what  we  owe  her,  and  calls  for 
it  in  gold,  if  our  currency  is  based  thereon, 
the  foundation  is  withdrawn  and  the  super- 
structure tumbles,  as  it  has  always  tumbled 
heretofore,  burying  in  its  debris  the  savings 
and  hopes  of  half  a generation. 

“ He  doth  destroy  mine  house 

Who  doth  destroy  the  prop  which  holds  mine  house.” 

With  gold  demonetized,  this  is  just  our  posi- 
tion. Our  citizens  owe  balances  to  their  Euro- 
pean creditors,  variously  estimated  at  from  five 
hundred  million  to  one  thousand  million 
dollars,  payable  on  call.  These  balances  will 
remain  undisturbed  just  so  long  as  our  average 
rate  of  interest  is  very  much  higher  than  can 
be  obtained  in  Europe  (now  from  two  to  three 
times  their  rate),  and  no  longer. 

Should  the  rate  with  them  (implying  an  in- 
creased demand  for  money)  rise  to  our  level, 
or  should  our  rate  (implying  a more  ample 
supply)  fall  to  theirs,  those  balances  would  be 
called  for;  in  either  case  with  precisely  the 
same  results — to  wit : an  advance  in  the  price 
of  gold.  What  of  it? 

Before  the  small  amount — small,  contrasted 
with  our  liabilities — we  hold  could  be  drained, 
the  augmented  premium  would  have  caused 
all  kinds  of  exportable  products  and  manufac- 
tures to  be  sought  for,  and  bought  at  prices 
augmented  nearly  to  the  advance  in  gold — 
much  to  the  benefit  of  the  nation.  Who  is 
hurt  ? 

Another  beneficial  result  would  appear.  In 
exactly  the  same  ratio  as  the  gold  premium 
acted  as  a bounty  to  our  producers,  it  would 
act  as  a protective,  or  prohibitory  tariff,  on  im- 
ports. Again,  who  is  hurt  ? 

I am  not  sure  but  it  would  result  in  annihil- 
ating free-traders  and  tariff-men  as  such,  grati- 
fying the  former  by  closing  the  custom-houses 
and  discharging  the  officials,  and  responding 
to  the  latter  by  an  equivalent  to  a tariff,  on  a 
sliding  scale,  worked  without  cost,  and  also 
responding  to  all  national  requirements;  thus 
not  only  developing  all  our  industries  to  a 
hitherto  un though t-of  activity  and  extent,  giv- 
ing our  commerce  the  area  of  the  planet  for  a 
market,  but  purifying  our  political  atmosphere 
from  the  tendency  to  corruption  engendered 
by  political  patronage,  which  presses  on  all  its 
surface  and  permeates  every  pore. 

Our  system  designs  no  fraud  on  our  foreign 
creditors,  who  are  entitled  to  their  dues  when 
they  want  them — in  fact,  it  facilitates  their  real- 
ization. 

We  hold  our  gold  (like  all  other  merchandise 
and  products)  subject  to  the  demands  of  our 


creditors,  and,  holding  the  same  by  so  preca- 
rious a tenure,  has  it  not  always  been  rash  to 
allow  it  to  be  the  basis  of  our  money,  and  espe- 
cially so  now,  when  our  currency  has  stood 
more  firmly  than  ever,  subjected  to  almost  the 
greatest  supposable  strain  for  a dozen  years, 
based  on  the  property  and  production  of  the 
nation?  Would  it  not  now  be  insanity  again 
to  tangle  all  our  material  interests  in  what 
Washington  called  an  “ entangling  foreign  alli- 
ance” with  Europe? 

Every  banker  knows  the  feverishness  with 
which,  in  the  former  reign  of  King  Bullion, 
European  events  were  watched. 

If  money  was  plenty  on  Threadneedle  Street 
— Bank  of  England  notes  three  per  cent,  per 
year,  street  rates  one-half  per  cent,  less— for- 
eign creditors  ordered  their  funds  invested 
here ; money  plenty,  discounts  free,  and  “ every- 
thing lovely.” 

Then  comes  a European  commotion.  Ger- 
many or  somebody  else  wants  money.  Gold 
goes  out  of  the  Bank  of  England.  Interest 
advances  there.  Our  foreign  correspondents 
draw  or  order  remittance;  specie  is  shipped; 
discounts  are  shut  off ; loans  on  storage  certifi- 
cates and  other  collaterals  are  called  in  ; mer- 
chandise sacrificed  at  half  the  cost  of  produc- 
tion ; thq  year’s  savings  of  the  merchant  are 
gone  in  an  hour. 

This  is  but  a flurry,  which  occurs  twenty 
times  where  a panic  does  once. 

The  flurry  is  distressful — the  panic  is  horri- 
ble. Grand  old  firms,  with  assets  twenty 
times  enough  to  meet  their  liabilities,  arc  upset, 
smashing  smaller  fry  as  they  tumble.  Honor- 
able merchants,  who  to  pay  the  pound  of  flesh 
do  not  wait  for  Portia’s  ruling,  but  pay  it,  if  all 
their  heart’s  blood  follow,  so  that  their  honor 
is  saved.  Daily  and  hourly  destruction  of  life 
by  the  intensest  torture.  Wealth  destroyed 
more  rapidly  than  in  war.  Banks  sympathiz- 
ing, but  do  no  more,  for  at  that  crisis  to  afford 
relief  would  be  their  own  legal  destruction. 
Cities  telegraphing,  watching,  listening  to  cities, 
hoping,  trusting,  praying  that  their  neighbors 
would  be  the  first  to  sunder  the  chain  which 
is  strangling  the  nation ; and  when  the  word 
flashes  from  Albany  that  our  metropolitan 
banks  may  clear  their  necks  from  the  murder- 
ous halter  and  suspend , in  an  instant,  simulta- 
neously, New  York  and  Boston — with  a heart- 
felt Thank  God! — breathe. 

But  at  what  a cost ! the  accumulation  of  a 
decade  gone  in  an  hour — and,  with  many,  the 
last  productive  decade  on  earth,  and,  oh,  their 
widows  and  orphans ! 


11 


Did  such  disastrous  results,  worse  than  sink- 
ing a navy,  occur  on  any  coast,  millions, 
if  necessary,  would  be  expended  for  beacons 
to  warn  the  sailors.  Did  they  result  from 
physical  malaria,  not  a Grand  Jury  in  Chris- 
tendom but  would  indict  the  cause  as  a nui- 
sance. 

But  we,  with  an  infatuation  more  criminal 
than  that  of  the  worshipers  of  Juggernaut, 
consider  these  things  as  inevitable  decrees  of 
nature. 

And,  in  a sense,  so  they  are,  as  was  the 
plague  of  London,  and  more  recent  visitation 
of  the  cholera,  decrees  of  nature  until  the 
causes  were  removed,  when  the  disease  disap- 
peared with  it. 

Men  and  bretheren ! why  will  you  not  apply 
the  same  tests  of  analysis  and  synthesis  to  the 
nation’s  life-blood  which  you  do  to  a hen  chol- 
era or  a potato  rot. 

We  have  above  more  facts  to  form  a science 
on  than  Newton’s  apple  or  Watt’s  tea-kettle 
afforded.  The  cause  of  the  disastrous  panics 
which  have  before  the  war  so  often  prostrated 
our  country,  are  directly  traced  to  specie  affil- 
iation; this  is  proved  by  the  removal  of  the 
cause,  which  has  always  been  followed  by  dis- 
appearance of  the  symptoms. 

This  inference  is  further  sustaii®d  by  the 
fact  that  since  our  currency  has  been  par- 
tially sundered  from  this  feverish  element,  such 
deplorable  phenomena  have  disappeared,  and 
we  have  found  our  circulation  healthy  in  just 
the  same  ratio  as  we  have  refrained  from  that 
disturbing  cause. 

From  the  above  we  may  deduce  this  axiom : 
As  long  as  America  bases  her  currency  wholly 
or  in  part  upon  specie,  Americans  live  finan- 
cially on  European  suffrance. 

In  this  connection  we  quote  Mr.  Charles 
Sears,  one  of  our  best  political  economists : 

“ Independently  of  circumstances  and  on  its 
merits,  the  ‘Specie  Basis’  hypothesis  is  the 
most  disorganizing  element  that  ever  obtained 
place  in  society,  and  its  ghostly  presentments 
ought  to  be  laid  without  benefit  of  clergy  when- 
ever they  show  in  daylight. 

“ On  this  hypothesis  our  monetary,  industrial, 
and  commercial  system  constitute  a huge  pyra- 
mid or  cone  standing  upon  its  apex.  Forty 
billions  of  property  resting  upon  six  billions 
of  current  production,  which  rests  for  its  value 
upon  say  seven  hundred  millions  of  currency, 
which  in  turn  for  its  value  rests  upon  two  hun- 
dred and  fifty  millions  of  specie,  which,  so  far 
as  our  possession  of  it  is  concerned,  depends 
upon  the  interest  and  the  good-will  of  our 


rivals  in  industry  and  haters  of  our  political 
system. 

“ The  precious  metals,  being  limited  in  quan- 
tity, are  insufficient  to  meet  the  demand  for 
money  to  effect  exchanges,  and  the  quantity  is 
supplemented  by  the  fiction  of  paper  money 
payable  three  or  four  dollars  for  one  in  coin. 
Here  is  an  artificial  limit  to  production  and 
exchange.  Coin  being  limited,  bank  notes  on 
the  specie  basis  must  necessarily  be  so,  even 
if  the  legitimate  demand  for  money  in  produc- 
tion and  exchange  be,  as  it  usually  is,  three 
or  four  times  greater  than  the  sum  of  coin  and 
bank  notes.  At  this  point  a system  of  extend- 
ed credits  intervenes,  and  private  obligations 
supplement  the  bank  notes ; so  that,  upon  the 
day  of  liquidation,  the  balances  would  amount 
to  ten,  twenty,  or  fifty  times  the  amount  of 
coin. 

“ Of  course  on  this  system  all  people  in  all 
times  have  been  insolvent.  Production  and 
trade  have  been  carried  on  upon  suffrance. 
So  long  as  confidence  continued  unimpaired, 
the  movements  of  property  were  kept  up,  but 
the  exigencies  of  -war,  of  local  trade,  of  the 
stock  and  money  speculators  (the  real  money 
being  limited  in  quantity  invites  speculation), 
the  natural  tendency  of  the  system  itself  requiring 
periodical  settlements , demonstrate  the  general 
insolvency.  Within  the  last  fifty  years  pay 
day  has  come  quite  regularly  at  the  end  of 
every  ten  years.  Something — any  one  of  a 
dozen  or  twenty  causes,  few  know  what — sets 
gold  flowing  out.  Fifty  millions  withdrawn 
in  a short  time  from  their  usual  places  of  de- 
posit is  quite  sufficient  to  make  the  whole  vol- 
ume of  coin  disappear  from  ordinary  commer- 
cial circulation  as  completely  as  if  it  never 
existed.  The  ‘ Metallic  Basis  ’ is  gone,  slipped 
out ; the  pivot  of  the  system  is  dislocated ; 
somebody  wanted  it  and  took  it ; and  the  pyra- 
mid tumbles  down,  burying  in  il§ -ruins  three- 
fourths  of  a business  generation.  The  creditor 
class  does  not  even  now  get  specie  payment  of 
balances  from  the  debtors,  but  such  property 
as  may  be  in  possession,  or  a list  of  uncollect- 
able credits.  Nor  does  specie  enter  into  ordi- 
nary commercial  liquidations  to  much  extent  at 
any  time.  In  the  immense  volume  of  our  ex- 
changes, specie  payments  do  not  enter  to  tho 
extent  of  one-tenth  of  one  per  cent. ; the  pre- 
tense of  specie  payments,  therefore,  is  a false 
pretense,  not  innocent  by  any  means,  but  a 
ruinous  falsehood ; which,  together  with  the 
limited  volume  of  currency  incident  to  the  sys- 
tem and  the  consequent  high  rate  of  interest, 
is  rapidly  concentrating  in  the  hands  of  a small 


12 


class,  those  who  control  gold,  who  ‘ traffic  in 
the  revenues  of  Empire,’  the  surplus  earnings 
of  the  nation. 

“ For  a dozen  years  past  we  have  enjoyed 
immunity  from  these  commercial  cataclysms, 
although  during  this  period  we  carried  on  a 
devastating  war,  and  our  activities  were  sud- 
denly arrested  and  changed  into  new  direc- 
tions, incident  to  the  close  of  the  war.  SucH 
immunity  has  been  due  to  two  causes: 

“ First,  to  the  fact  that  we  cast  out  from  our 
monetary  system  the  lying  pretense  of  specie 
payments. 

“ Second,  to  the  larger  volume  of  currency  in 
circulation,  enabling  us  to  make  exchanges 
with  facility,  and  also  to  make  cash  settlements 
more  largely  than  ever  before,  and  so  elimi- 
nating one  element  of  bankruptcy  from  our 
dealings,  namely,  credit.  Truth  in  our  mone- 
tary system,  and  a larger  volume  of  currency, 
saved  us. 

“ The  laws  governing  the  production  and  ex- 
change of  property  necessarily  inhere  in  its 
representative,  therefore  the  measure  of  mone- 
tary issue  should  be  freely  responsive  to  the 
demand  for  it  in  production  and  exchange. 
There  would  be  the  same  propriety  in  restrict- 
ing production  and  exchange  by  law  that  there 
is  in  restricting  by  law  the  issue  of  the  money 
required  for  production  and  exchange,  provid- 
ed always  that  money  represent  property,  and 
not  person  or  credit.  Money  is  the  currency 
which  floats  property,  by  its  title,  from  hand 
to  hand,  as  water  is  a current  to  float  property 
from  place  to  place ; and  there  would  be  the 
same  wisdom  in  restricting  the  supply  of  water 
in  our  canals  to  one-third  or  other  proportions 
of  their  capacity,  as  there  is  restricting  the  vol- 
ume of  our  currency  to  one- third  or  other  pro- 
portion of  the  volume  required  to  make  ex- 
changes. In  either  case  property  perishes  by 
detention  in  transit. 

“ To  establish  and  maintain  a just  balance,  a 
working  equilibrium  between  property  and 
money,  is  a financial  problem  which,  perhaps, 
only  the  people  of  the  United  States  can  solve. 
The  opportunity  has  come,  and  the  method 
has  been  indicated,  namely,  by  a Government 


issue  of  bonds  bearing  a low  rate  of  interest, 
which  rate  shall  not  much  exceed  the  average 
annual  increase  of  property  and  bond  certifi- 
cates ; the  bonds  and  bond  certificates  to  be 
mutually  convertible,  at  the  option  of  the 
holder. 

“ These  bonds  to  replace  the  existing  bonds 
as  rapidly  as  the  conversion  can  be  made. 
They  would  still  represent  the  public  debt,  but 
they  also  represent  part  of  the  cost  of  our  civ- 
ilization ; they  stand  for  a certain  value,  name- 
ly, our  institutions,  lawrs,  usages ; and  for  the 
present  are  a suitable  basis  of  currency  issue. 
They  would  constitute  the  reservoir  into  which 
any  surplus  currency  would  speedily  flow  when- 
ever the  volume  afloat  should  rise  above  the 
industrial  demand.  These  bond  certificates, 
together  with  coin  certificates  and  coin,  would 
provide  a currency  adequate  to  all  our  moneta- 
ry want.  * * * 

“ Whenever  we  get  out  of  debt,  and  have  no 
further  occasion  to  issue  bonds,  property  cer- 
tificates, based  on  current  production,  may  re- 
place the  certificates  issued  on  the  bonds,  and 
the  current  expenses  of  Government  be  paid 
from  interest  on  loans.  That  is  to  say,  the 
people,  collectively,  would  loan  tHeir  own 
money  to  themselves  in  their  private  capacity, 
and  prov^e  a currency  at  so  low  a rate  of  in- 
terest that  our  resources  may  be  freely  devel- 
oped without  artificial  restriction,  and  Govern- 
ment be  maintained  without  other  taxation 
than  the  small  interest  representing  part  of  the 
annual  increase  of  property. 

“ Every  step  of  change  henceforth  should 
contemplate  a forward  movement  toward  a 
popular  monetary  system,  corresponding  with 
our  popular  political  and  religious  system,  and 
not  in  any  measure  tending  backward  to  the 
financial  scheme  of  past  ages,  generated  of, 
and  in  accord  with,  despotic  institutions  and 
caste  society,  and  which  has  been  for  our  in- 
dustries a system  of  organized  destruction. 

“ Let  us  have  a people’s  money,  and  abolish 
credit  in  exchanges.” 

In  future  numbers  we  shall  treat  on  the  elas- 
ticity, cheapness,  volume,  and  convertibility  of 
our  proposed  system. 


THE  CURRENCY  OF  THE  FUTURE. 

ELASTICITY,  VOLUME,  CONVERTIBILITY,  AND  CHEAPNESS. 


TN  the  first  article  of  this  series  (to  which,  in 
this  connection,  we  refer  our  readers)  we 
quoted  largely  from  the  able  speech  of  Mr. 
Buckingham,  in  the  United  States  Senate,  Jan- 
uary 7th,  1873,  and  from  Mr.  Boutwell’s,  Secre- 
tary of  the  Treasury,  report  of  December,  1872, 
arraigning  the  currency  for  its  lack  of  elasticity. 

The  extract  from  Mr.  Boutwell’s  report 
closed  thus : “ The  problem  is  to  find  a way  of 
increasing  the  currency  for  moving  the  crops 
and  diminishing  it  at  once  when  that  work  is 
done.” 

Our  response  is : Let  Congress  pass  a very 
simple,  and,  therefore,  easily-understood  law, 
providing  for  the  issue  of  treasury  notes  (green- 
backs) as  legal  tender  for  all  purposes  what- 
ever, to  the  extent  which  the  requirements  of 
the  country  indicate,  and  make  such  legal  ten- 
der reconvertible,  at  the  option  of  the  holders, 
into  Treasury  bonds  bearing  a rate  of  interest 
not  much  in  excess  of  the  average  annual  na- 
tional increase  of  property — say  3.65  per  cent, 
per  year.  * 

“ In  the  interchangeability  (at  the  option  of 
the  holder)  of  national  paper  money  with  Gov- 
ernment bonds  bearing  a fixed  rate  of  interest, 
there  is  a subtile  principle  that  will  regulate 
the  movements  of  finance  and  commerce  as 
accurately  as  the  motion  of  the  steam-engine 
is  regulated  by  its  ‘governor.’  Such  paper 
money  tokens  would  be  much  nearer  perfect 
measures  of  value  than  gold  and  silver  ever 
have  been  or  ever  can  be.” 

Our  readers  should  impress  the  above  firmly 
in  their  minds,  as  there  is  more  financial  sci- 
ence contained  therein  in  its  adaptability  to 
our  present  national  need,  than  in  all  the  vol- 
umes of  political  economy  ever  before  written. 

Horace  Greeley,  in  a characteristic  editorial 
of  the  Tribune , Nov.  9,  1871,  said : 

“ The  benefits  of  this  sj'stem  would  be  these : 
Our  greenbacks,  which  are  now  virtual  false- 
hoods, would  be  truths.  The  Government 
would  pay  them  on  demand  in  bonds,  as  afore- 
said, which  is  in  substantial  accordance  with 
the  plan  on  which  the  greenbacks  were  first 
authorized. 

“ Our  greenbacks,  no  longer  false,  but  con- 
vertible at  pleasure  into  bonds  bearing  a mod- 
erate gold  interest  and  exchangeable  as  afore- 
said, could  not  fail  to  appreciate  steadily  until 
they  nearly  reached  the  level  of  gold.  Indeed, 


they  would,  unless  issued  too  profusely,  be 
really  better  than  gold.  Drawing  a higher  rate 
of  interest  than  British  consols,  and  converti- 
ble at  pleasure,  as  these  are  not,  they  would 
in  time  obtain  currency  even  in  the  Old  World. 

“ The  trouble  so  inveterately  borrowed  by 
thbusands  with  respect  to  ‘ over-issues,’  ‘ re- 
dundant currency,’  etc.,  would  (or  at  least 
should)  be  hereby  dispelled.  If  there  were  at 
any  time  an  excess  of  currency,  it  would  tend 
to  precipitate  itself  into  the  bonds  aforesaid. 
If  there  should  ever  be  a scarcity  of  currency, 
bonds  would  be  exchanged  at  the  Treasury  for 
greenbacks  till  the  want  was  fully  supplied. 
Black  Fridays  and  the  locking  up  of  green- 
backs would  soon  be  numbered  with  lost  arts 
and  hobgoblin  terrors. 

“ Though  the  demand  for  these  bonds  might 
for  months  be  moderate,  their  convenience  and 
manifest  utility  would  soon  diffuse  their  popu- 
larity and  stimulate  an  ever-widening  demand 
for  them.  They  would  be  a favorite  invest- 
ment with  guardians  and  trustees,  who  should 
expect  to  be  required  to  pay  over  the  funds 
held  by  them  at  an  early  day,  whether  fixed 
or  uncertain.  They  would  say,  ‘ Though  I 
might  invest  or  deposit  these  funds  where  they 
would  command  a higher  interest,  I choose  to 
place  them  where  I know  they  will  be  safe  and 
at  hand  when  called  for.’ 

“ Ultimately,  we  believe  they  would  become 
so  popular  that  hundreds  of  millions  of  them 
would  be  absorbed  at  or  very  near  the  par  of 
specie,  and  that  with  the  proceeds  an  equal 
amount  of  our  outstanding  sixes  might  be  re- 
deemed and  canceled,  without  advertising  for 
loans  or  paying  bankers  to  shin  for  us  through- 
out Europe.  The  interest  thus  saved  to  our 
country  would  be  an  important  item. 

“ Such  are  the  rude  outlines  of  a plan  which 
we  did  not  originate,  but  which  we  heartily 
indorse.  Why  not  give  it  a trial?  We  should 
dearly  like  to  inform  Europe  that,  since  she 
seems  not  to  want  any  more  of  our  bonds  at 
five  per  cent.,  we  have  concluded  to  take  the 
balance  ourselves  at  3£.” 

Some  one  has  well  remarked  that  the  truest 
test  of  a scientific  theory  is  in  its  power  of  pre- 
diction. Measured  by  that  severe  criterion, 
the  verdict  must  be  in  our  favor,  for,  while  our 
opponents  have  been  entirely  bewildered  by 
the  phenomena  of  last  fall,  political  economists 


14 


of  our  school  predicted  them,  and  placed  the 
predictions  on  record. 

An  analysis  of  the  foregoing  programme 
shows  a logical  division  into  four  parts,  thus  : 

1st.  Issue  of  Treasury  notes  (greenbacks)  to 
the  extent  which  the  needs  of  the  country  in- 
dicate. 

2d.  Such  notes  to  be  legal  tenders  for  all 
purposes. 

3d.  Such  notes  to  be  convertible,  at  the  op- 
tion of  the  holder,  into  Government  bonds 
bearing  a low  rate  of  interest. 

4th.  Such  bonds  payable,  principal  and  in- 
terest, in  said  currency  notes  on  demand. 

The  first  three  have  been  spasmodically  ac- 
cepted at  different  times  in  part;  sometimes 
under  pressure  of  necessity;  sometimes  from 
vague  aspirations  for  response  to  our  need — 
but  never  in  combination. 

The  result  has  been  like  that  of  a four-horse 
balky  team  — not  only  not  pulling  together, 
but  a part  laying  on  the  breaching,  while  the 
rest  pulled  on  the  traces. 

For  instance,  as  to  first  requirement  of  am- 
ple currency,  an  eminent  antagonist  in  the  col- 
umns of  the  N.  Y.  Times , over  the  signature 
of  “ Knickerbocker,”  says : 

“ By  reference  to  the  report  (Secretary  of  the 
Treasury)  of  August  31,  1865,  it  will  be  found 
that  the  circulating  medium  consisted  of 
United  States  Notes,  Greenbacks,  and 

Fractional  Currency $459,505,311.51 

National  Bank  Notes  and  State  Bank  is- 
sues, (Report  1865,)  by  Controller’s 
Report,  Oct.  1,  1865  250,189,478.00 

Total $709,694,789.51 

“ To  this  amount  must  be  added  the  sum  of 
five  per  cent,  legal  tender  notes,  and  of  certifi- 
cates of  indebtedness,  etc.,  shown  to  have 
amounted  to  $443,220,103.16 ; in  all,  a sum  of 
$1,152,914,892.67.  This,  then,  was  the  circu- 
lating medium  of  the  country  at  the  time  of  its 
greatest  expansion.  * * * 

“ The  Treasury  statement  of  July,  1868, 
shows  to  what  extent  the  circulating  medium 
had  been  then  contracted.  It  then  consisted  of 
United  States  Notes,  Greenbacks,  and 


Fractional  Currency $388,768,674.75 

National  Bank  Notes  outstanding  1st  No- 
vember, 1867 299,103,996.00 

Total $687,872,670.75 


To  which  we  add  the  sum  of  temporary  loan 
certificates  and  other  notes  serving  the  pur- 
poses of  currency,  amounting  to  $92,687,442.64, 
and  the  sum  of  circulating  medium  will  be 
found  to  have  then  reached  $780,560,113.39, 
and  shows  a contraction  by  the  Secretary  of 
$372,354,779.28  in  its  total  amount.  * * * 


“ The  country  at  large  had  felt  the  pressure 
of  the  screw,  but  had  not  been  able  to  discern 
precisely  from  what  quarter  the  pinch  came, 
the  contraction  being  confined  to  those  outside 
forms  of  Treasury  obligations  which,  though 
not  currency  in  the  strict  acceptation  of  the 
word, /were  still  used  as  such  in  the  larger 
transactions  of  trade  and  financial  exchange. 
When,  in  a time  of  general  pressure,  the  cur- 
rency itself  became  the  subject  of  the  pruning 
knife,  the  country  not  only  felt  the  knife,  but 
saw  how  it  was  handled — [these  italics  are  ours] 
— and  refused  to  submit  longer  to  the  ‘ heroic 
treatment.’  ” 

“Knickerbocker’s”  figures,  quoted  above, 
take  us  to  July,  1868,  when,  as  the  “ people  felt 
the  knife,  saw  how  it  was  handled,  and  refused 
to  submit  longer  to  the  heroic  treatment,”  the 
contraction  of  the  cast-iron  currency  was 
stopped,  and  the  people  allowed  to  “ grow  up 
to  it.” 

Five  years  have  passed,  and  as  we  double  in 
population  in  thirty  years,  it  follows  that  we 
are  one-sixth  larger  in  1873  than  when  we 
groaned  so  awfully  in  1868.  This  one-sixth 
growth,  with  the  same  volume  of  currency, 
amounts  practically  to  a contraction  of  one- 
si^th  of  the  aggregate  of  1868,  and  now  we 
have  but  $13.68  currency  per  head  (including 
$40,000,000  in  gold  quoted  by  the  Controller  t 
of  the  Currency  as  “ in  circulation  ”).  which  is 
about  one-half  the  average  of  France,  one-third 
of  England,  and  29£  per  cent,  of  that  quoted 

“ Knickerbocker  ” as  existing  at  the  close 
of  the  war. 

No  wonder  that  our  industries  are  paralyzed, 
and  our  crops  stuck  in  transit  for  lack  of  cur- 
rency to  move  them. 

With  the  foregoing  figures  — taken,  mind 
you,  from  the  compilation  of  our  antagonists — 
before  us  on  one  hand,  and  Hunt's  Year-Book , 
and  other  statistical  authorities,  on  the  other, 
let  us  see  how  this  resulted. 

The  mercantile  failures  in  the  Northern 
States,  from  1862  to  1870,  inclusive,  which  we 
copy  from  Hunt's  Magazine  and  Year-Book  for 
1870,  were: 

v Number  of  Aggregate 

xear-  failures.  liabilities. 


1862  1,652  $23,049,000 

1863  495  7,899,000 

1864  520  8,579,000 

1865  530  17,625,000 

1866  632  47,333,000 

1867  2,386  86.218,000 

1868  2,197  57.275,000 

1869  2,411  65,246,000 

1870  3,160  79,697,000 


We  supplement  the  foregoing  table  with  the 


following  (for  tlie  whole  nation),  of  commercial 
failures  for  1870,  ’71,  and  ’72 : 

_ Number  of  Aggregate 

*ear*  failures.  liabilities. 


1870  3,551  $88,242,000 

1871  2,915  85,252,000 

1872  5,009  121,056,000 


From  the  indication  of  the  last  few  weeks, 
we  must  certainly  be  convinced  that  the  record 
of  .the  dead  of  ’73  will  be  overwhelmingly  in 
excess  of  its  predecessor. 

This  computation  does  not  include  any  losses 
not  resulting  in  absolute  failures,  but  it  indi- 
cates beyond  cavil  that  there  were  six-fold 
more  of  losses  and  disasters  during  each  year 
of  currency  contraction  than  during  each  year 
of  full  currency. 

It  will  be  observed  by  comparison  of  dates 
of  contraction  with  dates  of  failures  that  they 
kept  pace  in  equal  step.  To  effect  these  re- 
sults— as  orderly  and  economical  as  the  career 
of  a mad  bull  in  a crockery  store — the  Govern- 
ment— 

1st:- Retired  its  certificates  of  indebtedness 
by  borrowing  gold  from  Europe  at  a high 
rate  of  interest  and  giving  bonds,  which,  with 
exemption  from  taxation,  cost  the  people  at 
least  10  per  cent,  currency  interest,  when  the. 
people  themselves  would  gladly  have  taken 
currency,  saving  all  gold  premium  and  interest. 

2d.  It  created  and  continued  the  existence  of 
about  $400,000,000,  bonds  costing  10  per  cent, 
interest  as  above,  to  enable  it  to  withdraw  and 
withhold  $354,000,000  currency  from  the  peo- 
ple for  no  other  purpose  than  to  retain  said 
bonds  as  security  for  its  indorsing  the  paper  of 
holders  of  said  bonds,  for  which  indorsement 
said  Government  gets  1 per  cent,  per  year  in- 
terest, and  calls  it  tax,  while  the  people  would 
have  been  much  better  pleased  to  have  retained 
their  own  paper  and  saved  the  bond  interest. 
In  short,  in  this  transaction  the  people,  collect- 
ively, through  their  agents,  borrow  money  at 
10  per  cent.,  and  loan  it  again  at  1 per  cent,  to 
the  bond-holders,  who  re-loan  it  to  the  individ- 
ual people  at  7 per  cent,  to  50  per  cent,  per  year. 

3d.  With  plenty  of  bonds  outstanding  cost- 
ing, as  above,  10  per  cent,  interest,  it  called  in 
and  paid  off  all  its  3 per  cent,  indebtedness. 

4th.  It  then  attempted  to  absorb  the  remain- 
der of  the  life-blood  currency  of  the  people  at 
the  rate  of  $4,000,000  per  month,  and  actually 
progressed  eleven  months  in  the  nefarious  work 
when  (to  quote  our  antagonist  again)  “the 
people  not  only  felt  the  knife,  but  saw  liow  it 
was  handled , and  refused  to  submit  longer  to 
the  heroic  treatment.” 


Like  John  Le  Pean,  they  “ could  eat  cater- 
pillars, but  squash  bugs  were  a little  too  fat.” 

When  Jim  Fisk  and  other  geniuses  stole  the 
Erie  Railroad,  the  splendor  of  the  villainy  so 
dazzled  the  world  that  for  the  moment  men 
forgot  to  call  it  stealing. 

A deep  conviction  is  fast  gaining  ground  that, 
emboldened  by  that  operation,  his  old  fellow- 
workers,  with  other  conspirators  on  both  sides 
of  the  Atlantic — some  Jews,  others  bad  Chris- 
tians— have  a deep-laid  plot  to  so  reduce  the 
values  of  the  nation  that  a ring  of  a thousand 
men  can  gobble  them  all  up. 

Most  certainly,  if  such  is  their  plan,  the  past 
action  and  present  lethargy  of  our  legislative 
and  executive  departments  play  well  into  their 
hands. 

We  have  endeavored  to  show  that  at  one 
time  the  first  requirement  of  the  currency  of 
the  future,  to  wit : adequacy  to  wants  of  the 
country  existed,  and  during  its  existence  we 
enjoyed,  notwithstanding  the  waste  and  rav- 
ages of  war,  an  unparalleled  prosperity,  and 
by  the  highest  statistics  have  also  shown  de- 
cadence in  prosperity,  coextensive  with  reduc- 
tion of  the  currency,  until  we  are  now  in  an 
almost  entire  collapse;  could  show  that  the 
material  loss  to  our  country  from  the  errors  of 
legislation  since  the  war  has  been  greater  than 
the  money  cost  of  the  war,  and  do  boldly  affirm 
that,  with  the  loss  to  our  great  industrial  com- 
petitor of  men  by  emigration,  exhaustion *of 
her  iron  and  coal,  our  superior  power  of  pro- 
duction of  the  great  staples,  iron,  coal,  cot- 
ton, wool,  tobacco,  naval  stores,  grain,  petro- 
leum, gold,  silver,  etc.,  and  our  better  mechan- 
ics, if  we  avail  ourselves  of  our  own  domestic 
money,  under  scientific  regulation,  at  a cost 
not  much  beyond  its  earnings,  in  ten  years  we 
will  have  re-established  our  naval  prestige ; 
become  the  dominant  manufacturing  and  naval, 
as  we  are  the  greatest  agricultural,  power  in  the 
world,  and  instead  of  the  planet’s  exchanges 
centering  in  England,  they  will  be  with  us. 

The  second  requirement  is  that  such  notes 
shall  be  legal  tenders  for  all  purposes. 

The  present  greenback  is  indorsed  as  “ legal 
tender  for  all  debts  except  duties  on  imports 
and  interest  on  the  public  debt.”  "Wipe  out 
these  exceptions.  The  gold  received  for  duties 
on  imports  is  only  required  to  enable  the  Gov- 
ernment to  pay  out  the  same  for  interest.  Let 
it  buy.  Such  will  be  the  stimulus  that  this 
domestic,  natural,  self-sustaining,  and  self-reg- 
ulating currency  will  give  to  all  our  produc- 
tion, that  very  soon  the  balance  of  trade  will 
be  in  our  favor,  and  gold  easy  at  par. 


16 


England,  with  infinitely  smaller  resources  and 
larger  proportionate  foreign  liabilities  than  we, 
not  able  to  furnish  her  quota  of  men  for  her 
continental  wars,  agreed  to  supply  the  defi- 
ciency in  money,  and  did  it — boldly  meeting 
the  question  prohibiting  the  payment  of  specie 
and  augmenting  her  currency.  And  such  a 
currency ! like  her  consols  (consolidated  in- 
terminable annuities)  utterly  unredeemable,  and 
therefore  infinitely  inferior  to  that  proposed 
by  us.  But  bad  as  that  currency  was,  it  did 
the  work ; her  productions  were  stimulated ; 
although  heavily  in  debt  to  the  foreigner,  the 
balance  of  trade  soon  became  largely  in  her  fa- 
vor. She  received  balances  at  her  option  in 
gold  or  her  own  outstanding  obligations.  She 
wisely  took  the  latter,  and  now  her  creditors 
are  mostly  her  own  citizens,  all  civilization  her 
debtors,  with  perennial  balances  flowing  in 
from  all  quarters. 

Since  writing  the  above  our  attention  has 
been  called  to  an  admirable  article  by  W.  H. 
Winder  in  the  New  York  Express , from  which 
we  quote  freely  thus.  Will  the  reader  please 
remember  that  convertible  in  the  extract  means 
in  gold  ? 

In  eminent  illustration  of  the  foregoing  truths 
we  may  cite  the  case  of  Great  Britain,  a coun- 
try in  all  of  the  natural  elements  of  wealth 
inferior  to  the  United  States  and  some  other 
countries,  yet  from  being  a heavily  debtor 
country  to  the  foreigner,  she  has  become,  by  a 
wise  fiscal  policy,  the  wealthiest  of  countries, 
the  creditor  and  the  banker  of  the  world,  pos- 
sessing the  largest  foreign  trade  of  any  country. 
All  countries  are  tributaries  to  this  insignificant 
island,  and  made  so  only  by  her  wiser  fiscal  policy. 

Will  not  a similar  fiscal  policy  to  that  which 
extricated  from  a large  foreign  debt,  and  has 
so  immensely  aggrandized  Great  Britain,  with 
our  vastly  superior  advantages  extricate  the 
United  States  from  its  foreign  debt,  and  enrich 
her  as  it  has  enriched  Great  Britain  by  a 
“ flourishing  ekport  trade,”  that  SOLE  specific 
for  the  extinction  of  foreign  debt  and  accumula- 
tion of  wealth  ? 

What  was  that  fiscal  policy  which  so  surely 
and  so  speedily  cleared  Great  Britain  from  her 
debt  to  the  foreigner,  restored  specie  payment, 
and  rendered  it  eminently  to  her  interest  to 
invite  all  countries  to  adopt  free  trade  and 
specie  payment  ? 

The  Government  of  Great  Britain  promptly 
adopted  the  only  policy  by  which  her  salvation 
could  be  secured ; it  prohibited  the  payment 
of  specie,  and  made  the  bank  notes  money. 
The  effect  of  this  fiscal  policy  was  two-fold: 


1st.  It  secured  a currency  impregnable  to  the 
foreigner ; it  was  not  in  his  power  to  contract 
and  expand  at  his  will  the  volume  of  currency, 
convulsing  trade  and  industry  at  every  change. 
It  is  a fact  of  official  record,  the  truth  of  which 
was  verified  by  the  Bullion  Committee  of  Par- 
liament, that  no  period  of  specie  payment  in 
England,  of  similar  duration  as  the  paper 
currency,  was  so  free  from  perturbations  as 
was  the  era  of  paper  currency ; nor  had  there 
been  a period  of  greater  activity  or  equal  pro- 
duction. 

2d.  The  foreign  creditor  had  but  the  two 
modes  of  an  alternative  to  get  home  his  funds 
from  Great  Britain : he  could  remit  in  gold  or 
in  commodities.  The  policy  o£  Great  Britain 
slight  to  render  gold  so  dear  and  inaccessible 
to  the  foreigner,  that  he  would  find  the  com- 
modities in  the  market  cheaper  than  the  gold 
in  market,  so  that  remittance  in  commodities 
would  be  preferable. 

The  inevitable  result  of  this  policy  became 
immediately  apparent  in  the  excess  of  exports, 
diminishing  on  the  one  hand  her  imports  (be- 
cause by  this  fiscal  policy  the  currency  acted 
favorably  for  domestic  commodities  and  against 
foreign  commodities),  and  augmenting  her  ex- 
ports (the  same  policy  in  the  currency),  compel- 
ling the  foreign  creditor  to  find  it  to  his  in- 
terest to  remit  in  commodities.  This  demand, 
forced  by  the  wise  fiscal  policy  of  Great  Brit- 
ain, for  her  commodities,  gave  full  and  profit- 
able employment  to  her  productive  industries ; 
it  familiarized  the  markets  of  the  world  with 
the  commodities  of  Great  Britain,  and  it  sys- 
tematized and  perfected  her  manufactures  to  a 
degree  which  rendered  her  the  equal  of  any, 
and  the  superior  to  most,  countries  in  the  pro- 
duction of  manufactured  commodities^  But  in 
the  very  flow  and  current  of  the  prosperity 
from  this  sagacious  fiscal  policy,  there  were 
then,  as  now,  many  crazy  people  obstreperously 
clamorous  for  “specie  payment,”  who  had 
scarce  a glimmering  of  the  true  meaning  of 
this  term ; ignorant  of  the  fact  that  the  policy 
then  denounced  was  in  strict  harmony  with 
the  principles  of  “ specie  payment,”  Pitt  and 
Addington  successfully  combated  and  exposed 
these  delusions.  They  presented  these  truths 
with  convincing  force — that  so  long  as  Great 
Britain  was  heavily  in  debt  to  “ foreign  parts,” 
specie  payment  was  a most  transparent  impos- 
sibility, a clear  absurdity ; because,  the  moment 
paper  was  convertible,  the  only  person  who 
would  convert  it,  or  who  had  any  occasion  to 
do  so,  was  the  foreign  creditor ; and  as  gold 
would  be  a better  remittance  for  him  at  par 


17 


than  commodities,  he  would  certainly  convert 
his  portion  of  the  currency  into  gold  and  ship 
it — thus  a resumption  of  specie  payment  would, 
in  fact,  be  only  a temporary  opening  of  the 
vaults  of  the  bank  to  give  the  foreigner  gold  at 
par  for  the  paper  held  by  him,  instead  of  buy- 
ing it  in  market  at  current  rates.  The  very 
moment  the  foreigner  should  thus  have  drained 
the  gold,  being  without  specie  for  the  conver- 
sion of  the  great  bulk  of  the  currency,  a sus- 
pension was  again  an  inevitable  result ; but 
the  process  of  resumption,  drainage  of  the  gold 
basis,  and  a collapse  to  suspension  of  specie 
payment  and  a forced  return  to  paper  currency 
would  be  attended  by  perturbations  in  the 
money  market,  convulsions  among  the  produc- 
tive industries,  a destruction  of  values,  a dis- 
bandment of  labor  and  multiplication  of  pau- 
pers. All  of  these  evils  would  be  incurred  by 
an  abortive  attempt  at.  premature  resumption, 
to  return  after  it  all.  to  a paper  currency,  with 
a period  for  resumption  indefinitely  postponed. 

* * * It  was  to  Pitt  a fact  as  clear  as  the 
noon-day  sun  that  Great  Britain,  heavily  in 
debt  to  the  foreigner,  with  a convertible  cur- 
rency, would  be  acting  the  part  of  an  idiot  in 
pretending  that  her  huge  paper  currency  was 
redeemable  in  gold,  when  everybody  knew 
that  the  foreign  creditor  owned  every  dollar  of  the 
gold ; that  it  would  remain  or  disappear  at  his 
option ; that  for  no  domestic  purpose  was  gold  a 
necessity in  no  domestic  transaction  was  there 
any  occasion  for  a dollar  of  gold.  Well  might  he 
defy  the  bullionists  to  show  that  resumption  by  a 
largely  debtor  country  could  benefit  any  produc- 
tive industry  — could  benefit  any  interest  except 
that  of  the  foreigner  and  monied  man  ; that,  in 
fact,  the  whole  sum  and  substance  of  such  a 
scheme  of  resumption  was  to  give  the  foreigner 
gold  at  par  for  the  currency  held  by  him.  The 
blindness  and  madness  of  men  who  bellow 
about  specie  payment  is,  in  the  face  of  all  the 
facts,  inconceivable.  In  Great  Britain,  under 
the  influence  of  the  policy  of  holding  gold,  the 
foreign  demand  for  commodities  increased,  ex- 
ports multiplied,  her  foreign  debt  dwindled  and 
was  rapidly  being  extinguished,  her  manufac- 
turing system  was  being  perfected,  and  she  was 
fast  approaching  that  point  where  extinguish- 
ment of  foreign  debt  is  attended  with  spontaneous 
resumption  of  specie  payment.  * * * 

The  country  was  steadily  and  surely  pro- 
gressing to  liquidation  of  the  foreign  debt  and 
to  specie  payment,  and  had  these  bullionists 
not  forced  matters,  Great  Britain  would  have 
reached,  naturally  and  without  disturbance,  all 
of  those  objects,  and  in  a condition  vastly  su- 


perior to  that  into  which  she  was  prematurely 
forced.  We  must  bear  in  mind  that  we  pos- 
sess all  of  the  elements  for  the  production,  and 
successful  competition  with  the  foreigner,  of 
iron,  cotton,  wool,  grain,  tobacco,  naval  stores, 
petroleum,  and  many  other  commodities. 

The  United  States  has  as  much  money  (gold) 
as  Great  Britain.  Why  can  not  the  United 
States,  with  this  equal  amount  of  money,  pay 
specie  and  make  loans,  as  does  Great  Britain  ? 
It  is  simply  because  the  gold  which  is  here  be- 
longs to  her  (England),  and  she  can  get  it  when 
she  wants  it,  and  so  with  gold  in  other  coun- 
tries ; it  suits  her  convenience,  her  policy,  and 
her  interest  to  allow  the  gold  -to  rest  with  for- 
eign countries  until  she  has  need  of  it.  The 
United  States  have,  really,  no  gold  here  or 
elsewhere,  and  under  its  existing  financial  pol- 
icy never  will  own  any.  * * * 

With  natural  resources  beyond  measure 
greater  than  Great  Britain,  by  our  blundering 
financial  policy  we  are  made  simply  a milch 
cow  for  sagacious  England.  * * * 

With  the  withdrawal  of  the  gold  by  the  for- 
eign creditor,  the  fabric  of  “ convertible  ” paper 
falls  into  ruin ; all  of  it  that  was  convertible 
inured  exclusively  to  the  foreigner,  who  did 
convert  his  share.  Thus  the  debtor  country  is 
left  without  any  money,  if  only  gold  and  paper 
convertible  into  gold  be  valid  money.  To 
convert  the  other  elements  into  commodities 
and  to  distribute  them  without  money  is  to 
work  with  paralytic  hands. 

As  gold  is  used  exclusively  by  all  nations 
as  international,  and  paper  currency  is  used 
exclusively  by  all  nations  as  domestic  currency, 
tli efact  is  fixed  that  there  are  two  distinct,  in- 
dependent currencies.  Then  why  not  accept 
the  fact?  Why  persist  in  the  folly  of  making 
the  domestic  currency  depend  upon  the  deal- 
ings of  the  foreign  or  international  currency  ? 
Let  international  currency  control  internation- 
al trade ; let  domestic  currency  control  domes- 
tic trade. 

And  right  here  we  interject  a challenge  to 
all  of  the  advocates  of  “ convertible  currency,” 
which  we  are  quite  sure,  however,  that  not  one 
of  them  will  be  found  bold  enough  to  accept : 

We  affirm  that  no  one  can  prove  that  any  rise 
in  the  price  of  gold , under  paper  currency , such 
as  ours , can  be  detrimental  to  any  American  pro- 
ductive industry. 

Upon  this  single,  simple,  sharp,  well-defined 
issue  hangs  the  whole  question  of  a converti- 
ble currency  in  a DEBTOR  country.  In  a 
creditor  country  a “convertible  currency”  is 
indigenous,  spontaneous,  and  unavoidable. 


18 


The  third  point  is  convertibility  of  the  cur- 
rency into  Government  bonds  bearing  a low 
rate  of  interest.  We  approached  that  in  the 
currency  issued  by  the  act  of  February  25th, 
1805  ( facsimile  of  indorsement  of  which  is 
herewith  given),  reading,  as  will  be  seen,  ex- 


#S»°TE% 

Legal  Tender 

for  all 

DEBTS,  PUBLIC  AND  PRIVATE, 
except  duties  on  imports  and 

INTEREST  ON  PUBLIC  DEBT, 

and  is  exchangeable  for 

TJ.  S. 

Six  Per  Cent.  Twenty  Years 

BONDS,  REDEEMABLE  AT  THE 
PLEASURE  OF  THE 

UNITED  STATES, 

five 


changeable  for  United  States  5-20  bonds.  This 
did  not  work,  as  the  rate  of  interest  on  the 
bonds  was  too  high,  6 per  cent,  gold,  with  ex- 
emption from  taxation  and  gold  premium  at  a 
high  rate,  equaling  10  percent,  to  15  per  cent., 
sucked  them  into  the  Treasury  as  fast  as  they 
could  be  issued. 

The  Government  got  out  of  this  scrape  by 
simple  repudiation,  and  there  are  hundreds 
of  thousands  of  dollars  of  that  currency  now  in 
circulation,  some  under  protest.  This  experi- 
ence should  teach  Congress  to  make  the  inter- 
est rate  as  low  as  possible ; $3.65  is  really  too 
high. 

But  the  fourth  element,  viz.,  such  bonds  pay- 
able principal  and  interest  in  such  currency  on 
demand  is  the  grand,  scientific,  controlling  ele- 
ment of  the  whole.  This  gives  the  long-covet- 
ed and  much-sought-for  element  of  elasticity  to 
the  currency.  This  is  the  element  lacking  in 
the  British  currency  of  her  great  wars,  and  if 
adopted  then  by  England  would  have  made 
her  currency  scientific  and  automatic  in  lieu 
of  empiric  and  spasmodic.  This  removes  the 
stigma  of  irredeemability.  This  removes  the 
temptation  of  the  country  banks  to  send 
their  idle  currency  in  the  summer  to  New 


York,  to  tempt  to  speculation;  but  instead 
floats  quietly  to  its  resting-place  in  the  Treas- 
ury, there  to  remain  until  the  requirements  of 
the  autumn  attract  it  forth  to  float  the  harvest 
of  the  nation  to  the  sea-board,  where 

—They  lightly  fall 
As  snow-flakes  fall  upon  the  sod, 

But  execute  the  freeman’s  will 
As  lightnings  do  the  will  of  God. 

A short  time  since  an  eminent  and  patriotic 
banker  dined  with  a friend  of  mine,  and  re- 
marked, concerning  a party  who  had  hoarded 
a hundred  thousand  dollars  through  the  “ pan- 
ic,” that  “ one  who  would  do  that,  knowing 
the  needs  of  the  country,  should  be  hung.” 
“ Whew  ! ” whistled  my  friend.  “ What  do 
you  mean  by  that?  ” said  the  banker.  “ Only, 
in  this  last  half  of  the  nineteenth  century,  when 
this  republic  is  almost  a hundred  years  old,  a 
gentleman  of  the  culture  of  yourself  who  ex- 
presses such  an  opinion  would  be  a more  eligi- 
ble subject  than  the  man  who  does  what  he 
pleases  with  his  money.  Don’t  you  see,  that 
as  every  greenback  is  but  a small  Government 
bond,  bearing  no  interest,  the  creditor  who, 
under  proper  legislation,  hoards  the  same  is 
a national  benefactor?”  was  the  response. 
“ That’s  so,”  said  the  banker. 

Again,  how  many  times  we  have  been  sailing 
in  a cockle-boat,  and  the  skipper  has  made  us 
all  set  to  the  windward  to  stiffen  the  craft,  and 
when  he  “ stood  by  the  sheets  to  taCk,”  how 
careful  he  was  to  have  us  ready  to  “ get  up  and 
get  ” to  the  other  side,  that  the  craft  might  not 
capsize ! Again,  we  see  the  big  men-of-war, 
whom  the  weight  of  a thousand  men  on  one 
side  would  not  careen. 

I think  of  that  often  when  folks  say,  “We 
build  too  many  railroads.”  What  hurt  does  it 
do  if  we  use  our  own  labor  and  iron  ? and  if 
we  import  iron  and  have  such  a balance  of 
trade  in  our  favor  that  we  can  pay  in  other 
products,  who’s  hurt  ? Nay,  suppose,  like 
most  of  our  railroads,  it  is  built  in  advance  of 
its  requirements ; it  may  be  hard  on  the  build- 
er, but  it  is  good  for  the  country. 

No,  my  friend;  with  our  financial  system 
right,  the  country  would  be  so  stiff  as  to  carry 
all  like  the  man-of-war  with  its  thousand  men ; 
not  like  the  cockle-boat,  which  tips  over  if  a 
fellow  gets  on  the  wrong  side. 


FINANCE- A COMMON  SENSE  VIEW. 

CHEAPNESS. 


A PROMINENT  merchant  remarked  a 
few  days  since  that  the  most  concise 
and  comprehensive  statement  of  financial  econ- 
omy that  he  knew  was  that  of  Mr.  Wilkins 
Micawber,  to  wit : 

1st.  Given  a revenue  of  £19  19s.  6d. ; expen- 
ditures, £20 ; result : misery. 

2d.  Given  a revenue  of  £20;  expenditures, 
£19  19s.  6d ; result : happiness. 

Apply  this  principle  to  the  earnings  of  our 
productive  industries,  and  the  rates  paid  by 
them  for  the  use  of  money. 

Authoritative  statistics  demonstrate  that  the 
average  annual  increase  of  our  productions  is 
3i  per  cent. 

The  Controller  of  the  currency  in  his  report, 
December,  1872,  shows  the  average  net  earn- 
ings of  capital  (including  surplus)  by  the  na- 
tional banks  for  the  year  ending  August  31st, 
1872,  to  be  10  36-100  per  cent.  Add  to  this 
rents,  salaries,  the  1 per  cent,  interest  (called 
tax)  paid  to  Government,  etc.,  and  the  figure 
will  be  fully  15  per  cent. 

This  is  the  bank  rate  of  earnings.  When  we 
remember  that  street  rates  are  largely  in  excess 
of  those,  and  that  brokers’  commissions,  legal 
costs  for  searches  of  real  estate — exaggerated 
to  avoid  usury  laws — etc.,  should  be  added, 
can  we  doubt  that  the  average  rates  paid  will 
fall  short  of  20  per  cent  ? 

Indeed,  the  bank  returns  in  some  sections 
show  largely  in  excess.  W e quote  net  earn- 
ings for  year  ending  Aug.  31,  1872  : 


Milwaukee 

17.93 

Nebraska 

14.02 

Iowa 

17.70 

Oregon 

Minnesota 

14.36 

Utah 

Missouri 

18.14 

Idaho 

38.87 

Kansas 

15.89 

Montana 

To  which  should  be  added,  as  above,  cost 
of  rent,  salaries,  and  the  1 per  cent,  interest 
(called  tax)  paid  to  the  Government  for  orig- 
inal loan. 

With  3 per  cent,  earnings  and  20  per  cent, 
cost,  it  follows  that  somebody  sinks  17  per 
cent,  per  year,  which,  in  much  less  than  6 
years,  compounded,  would  absorb  the  princi- 
pal. This  would  cause  a collapse  then,  but  as 
all  property  is  not  hypothecated,  liquidations 
or  panics  have  been  spread  10  years  apart — 
say  ’37,  ’47,  ’57,  and  would  have  been  in  ’67 
but  our  volume  of  currency  bridged  it  over. 

The  productive  interests,  universally  ac- 
knowledged even  by  the  old  political  econo- 


mists as  the  foundation  of  all  wealth,  being 
thus  undermined,  eaten  out,  honeycombed,  be- 
come so  weak  that  at  a touch  they  give  way, 
and  the  superstructure  tumbles. 

As  the  foundation  has  never  been  so  promi- 
nently in  sight  as  the  superstructure,  the  gen- 
eral observer  remarks  that  such  and  such  a 
building  has  tumbled,  as  palatial  houses  of 
finance  and  commerce  go  down ; but  a little 
removal  of  the  rubbish  will  show  that  the 
trouble  was  begun  in  the  cellar  walls. 

Here  and  now  let  us  remark  that  fhe  creditor 
as  well  as  the  debtor  interest  should  unite  in 
staying  the  devastation  of  this  condition  of 
things,  as  the  former,  not  seeing  that  his  reve- 
nues are  principally  derived  from  the  capital, 
and  not  the  revenue  of  his  debtor,  indulges  in 
extravagant  expenditure  and  injudicious  in- 
vestment, and  when  the  hour  of  liquidation 
comes,  he  falls,  and — 

“ — Like  the  baseless  fabric  of  a vision, 

Leaves  not  a wreck  behind.” 

The  elements  of  his  20  per  cent,  revenue  in 
commercial  language  can  be  analyzed  thus: 
Net  earnings  of  production,  as  above,  3 per 
cent ; Insurance  (otherwise  called  guarantee  or 
risk),  17  per  cent. 

As  he  had  no  policy  of  insurance  for  the 
same,  and  had  not  appropriated  a sufficient 
reserve  fund  for  the  contingency,  but  had  ex- 
pended for  personal  affairs  most  of  what  may 
be  called  the  premium,  he  falls — equally  a vic- 
tim with  his  debtor  to  our  fallacious  money 
system. 

Such  had  been  long  our  convictions,  sub- 
stantiated by  many  years’  residence  and  expe- 
rience in  our  metropolis,  observation  of  our 
local  and  neighboring  productive  interests,  and 
of  commercial  and  financial  matters  in  the 
great  city;  but  desirous  of  more  comprehen- 
sive information,  we  spent  some  weeks  of  the 
last  summer  in  the  interior  of  Illinois;  not 
traveling  by  railroads  and  living  at  hotels,  but 
in  the  saddle,  carriage,  and  on  foot,  mixing 
with  the  farmers,  staying  with  them  at  their 
homes,  and  taking  part  in  their  field  and  road 
work,  and,  therefore,  get  our  figures  from  our 
own  investigation. 

The  staple  of  that  section  is  corn ; 40  bushels 
to  the  acre  is  outside  the  average  crop,  and  25 
cents  per  bushel  outside  the  average  price. 


20 


Let  us  see  liow  this  pays  the  farmer : 


40  bushels  corn,  at  25  cents,  is $10.00 

Shucks  and  stalks 2.50 

Total  proceeds $12.50 

COST. 

5 days  man,  horses,  and  implements...  $10.00 
Interest  on  land,  $50,  at  10  per  cent. . . 5.00 

Taxes,  seed,  shelling,  insurance,  etc..  2.50 

Total  cost $17.50 

Loss  to  the  producer $5.00 


or  12|  cents  per  bushel. 

This  result  may  be  stated  thus : 

1st.  If  the  farmer  owes  nothing,  he  gets  $2 
per  day  for  his  capital  and  labor ; can  work  his 
land  200  days  in  the  year,  giving  annual  earn- 
ing at  $400;  that  is,  otherwise  stated,  $10  per 
acre  on  40  acres,  which  is  full  work  for  man 
and  team.  Out  of  that  he  must  pay  taxes  and 
shelling. 

2d.  Add  to  the  price,  12-£  cents  per  bushel, 
and  he  has  enough  to  pay  as  above,  and  10  per 
cent,  to  himself  or  somebody  else  for  use  of 
money. 

The  farmers  feel  very  sore  indeed  at  this  con- 
dition of  things;  they  are  working  for  less 
compensation  than  the  former  slaves ; the  la- 
bor is  harder  on  their  wives  than  on  themselves, 
as  the  cells  in  lunatic  asylums  and  early  graves 
testify;  they  see  no  chance  for  education  for 
their  children,  and  on  looking  around  for  the 
cause,  the  first  thing  that  meets  their  view  is 
the  railroad,  with  its  extreme  charges  of  one 
to  four  bushels  of  corn  for  taking  one  to  mar- 
ket ; its  watered  stock ; its  highly-paid  officials, 
its  heavy  dividends,  its  numerous  sub-corpora- 
tions, like  the  pilot,  blue,  green,  anchor  line, 
etc.,  “ all  little  credit  mobiliers,” — every  one 
of  "which  they  look  upon  as  parasites,  eating 
the  life  from  themselves  and  families.  They 
are  correct  as  far  as  they  go,  and  they  go  a 
great  way. 

But  we  don’t  believe  that  the  virtues  are  all 
with  one  class  and  the  vices  with  another. 

We  argued  on  a preceding  page  that  the  dev- 
ilish tendencies  of  our  money  system  bore  upon 
the  individual  creditor  as  harshly  as  upon  the 
debtor,  in  ultimate  result,  but  with  this  differ- 
ence : with  the  latter  the  ruin  -was  instantane- 
ous, like  death  by  lightning;  but  with  the 
former  a daily,  an  hourly  torment. 

Let  us  see  how  our  proposed  money  system 
would  affect  th§  railroads : 

As  the  bank  rate  of  interest  is  so  large,  and 
their  monopoly  of  cheap  money  from  the  Gov- 
ernment is  so  valuable,  resulting  in  such  desir- 
able official  positions  for  officers  and  dividends 
for  stockholders,  it  is  but  natural  that  the  rail- 


roads, and  every  other  money  interest,  should 
measure  themselves  by  the  same,  especially  as 
the  Government  pays  5 and  6 per  cent,  interest 
and  exemption  from  taxation  on  its  bonds, 
equaling  about  10  per  cent. 

If  the  Government  rate  was  3.65  per  cent., 
it  would  not  be  long  before  money  would  be 
accessible  on  bond  and  mortgage  at  5 per  cent. 

Then,  instead  of  our  railroad  agents  moving 
heaven  and  earth  to  sell  good  first  mortgage 
bonds  bearing  6 per  cent,  gold  interest  at  90, 
they  could  readily  locate  5 per  cent,  currency 
bonds  at  100.  New  and  needed  railroads 
would  be  built  with  double  freight  and  passen- 
ger tracks  where  necessary. 

Every  present  existing  railroad  east  of 
Buffalo  and  the  Alleglianies  could  have  its 
double  freight  tracks,  along  which  processions 
of  freight  trains  would  move  at  a regular 
speed  of  8 to  10  miles  an  hour,  in  lieu  of  the 
present  dangerous  and  costly  mode  of  dashing 
over  a single  track  at  the  rate  of  40  miles  an 
hour  to  gain  a siding  for  a passenger  train  to 
pass,  where,  perhaps,  it  may  wait  hours. 

Those  who  are  unfamiliar  with  railroad  mat- 
ters can  hardly  appreciate  the  dreadful  wear 
and  tear  of  such  spasmodic  running  of  freight 
trains  and  consequent  cost;  neither  are  they 
prepared  to  appreciate  the  immense  economies 
to  be  effected  by  substituting  moderate  speed 
and  continuous  running. 

This  competition  and  economy  would  prob- 
ably reduce  rates  one-half  to  one-third ; in 
other  words,  reduce  the  cost  from  40  to  20 
cents,  or  14  per  cent,  per  bushel. 

These  economies  in  the  instance  of  the  farm- 
er, quoted  above,  say  of  5 per  cent,  on  interest, 
equaling  $2.50  per  acre,  and  20  cents  per  bush- 
el on  40  bushels,  say  $8;  total,  $10.50  per 
acre,  would  overcome  the  present  loss  of  $5 
per  acre,  and  substitute  a gain  of  $5.50,  making 
a result  of  $3.10  per  day  for  himself  and  a pair 
of  horses  200  days  in  the  year,  or  an  aggregate 
of  $620.  Is  that  an  extravagant  compensation  ? 

Let  us  see  how  this  would  affect  our  national 
status.  No  doubt  four  times  the  cereals  would 
be  forwarded.  This  amount  would  cause  a 
depression  of  price,  followed  by  immensely  in- 
creased shipments  abroad.  Instead  of  Great 
Britain,  as  in  1872,  taking  from  Russia  140,000,- 
000  bushels,  and  from  us  40,000,000  bushels, 
the  figures  would  at  least  be  reversed. 

Our  exports  of  cereals  would  be  more  than 
quadrupled,  as  all  the  excess  over  about  the 
present  sea-board  consumption  would  be 
shipped.  Balance  of  trade  would  be  over- 
whelmingly in  our  favor,  and  we  should  re- 


21 


peat,  but  in  a much  larger  degree,  the  expe- 
rience of  England  under  very  nearly  parallel 
circumstances,  quoted  a few  pages  back,  of 
receiving,  first,  our  own  bonds  as  remittance  to 
be  paid  by  Government,  or  held  by  our  own 
citizens,  and  next,  a continuous  stream  of  spe- 
cie, which,  without  legislation,  would  rate  at 
par  or  less  for  currency. 

Then  we  should  take  the  position  which 
“ the  laws  of  nature  and  of  nature’s  God  seem 
to  have  assigned  to  us,”  the  first  power  in 
finance  as  in  production. 

Then  will  the  planet’s  exchanges  center  here, 
and  for  the  first  time  in  our  history  will  our 
independence  exist  in  fact,  and  we  shall  be  no 
more  tributary  to  England. 

‘^Seek  first,”  says  the  good  book,  “ the  king- 
dom of  God  and  its  righteousness,  and  all  other 
things  shall  be  added  unto  you.”  The  same 
idea  was  more  profanely  expressed  by  David 
Crockett,  “ Be  only  sure  you  are  right,  then  go 
ahead.” 

It  does  seem  as  if  this  perfecting  of  our 
finance  system  was  to  be  the  keystone  of  the 
arch  of  our  Republic. 

With  all  the  wisdom  and  conscientious  care 
of  the  fathers  of  our  Republic ; with  especial 
care  to  not  only  avoid  evil,  but  the  appearance 
of  evil,  they  legislated  against  even  the  forms 
and  titles  of  nobility  but  left  two  Oligarchies 
in  our  midst.  One,  the  slave  oligarchy,  said 
to  the  nation,  “ My  life  or  yours,”  and  died. 
The  other  has  reared  its  head  almost  as  high ; 
it  will  be  laid  as  low  as  its  brother.  Shall  we 
note  the  signs  of  the  times  and  peacefully  and 
scientifically  regulate  these  vital  currents  of 
the  nation,  or  shall  we  continue  to  drift  down- 
ward in  our  national  career,  until  the  people, 
having  exhausted  all  expedients  to  rouse  their 
agents  to  their  duty,  appeal  to  their  reserved 
right  of  revolution — perhaps  it  is  for  our  pres- 
ent Congress  to  say  ? 

But  how  about  the  ships  to  transport  this  in- 
creased product  across  the  ocean?  is  the  next 
query.  Our  production  even  now  has  in- 
creased so  much  faster  than  transportation 
that  ocean  freights  have  advanced  from  6 
pence  to  15  pence  per  bushel — equal  to  2 i 
former  steamship  prices ; and  herein  is  an  ex- 
tension of  the  same  element  of  cost  to  the  con- 
sumer and  loss  to  the  producer  that  we  noted 
•in  reviewing  railroad  freights,  and  from  the 
same  cause,  to  wit,  supply  inferior  to  demand. 
The  same  disease,  and  requiring  the  same  rem- 
edy, but  presenting  a different  class  of  phe- 
nomena. 

We  saw  that  the  rivalry  (not  competition)  of 


the  oligarchies  of  money  and  internal  transport- 
ation tended  to  large  costs  of  the  production 
of  each.  These  were  rivals  on  the  plan  of  our 
own  money  legislation. 

In  ocean  transportation  we  compete  with 
a people  who  were  so  fortunate  in  their  rulers 
as  to  be  protected  in  their  domestic  money  by 
cutting  all  money  affiliations  with  those  who 
could  destroy  them  for  a period  of  more  than 
18  years,  thus  making  them  creditors,  with  am- 
ple resources,  instead  of  debtors,  like  us,  whose 
money  existence  depends  on  the  will  of  others. 

By  recognition  of,  and  affiliation  with,  our 
insurgents,  they  wiped  most  of  our  merchant 
marine  out  of  existence,  and  we,  in  grateful  re- 
turn for  that  and  other  courtesies,  form  a 
Credit  Mobilier,  to  keep  the  use  of  our  own 
money  at  so  high  figures  that  it  is  prohibitory 
of  that  industry  which,  in  former  times,  was 
productive  of  so  much  pride  and  profit  to  us — 
we  mean 

SHIP  BUILD  IK  G. 

The  Secretary  of  the  Treasury  says,  in  his 
Report,  December,  1872 : 

“ The  condition  of  our  carrying  trade  with 
foreign  countries  is  always  a subject  of  inter- 
est, and  at  the  present  moment  it  is  one  of 
solicitude.  The  imports  and  exports  of  the 
United  States,  excluding  gold  dnd  silver, 
amounted  to  $1,070,641,163  for  the  fiscal  year 
ending  June  30,  1872,  and  of  this  vast  trade 
onty  28^  per  cent,  was  in  American  vessels. 
In  the  year  1860  nearly  71  per  cent,  of  our  for- 
eign commerce  was  in  American  ships ; but  in 
1864  it  had  fallen  to  46  per  cent.,  in  1868  to  44 
per  cent.,  and  in  1871  to  less  than  38  per  cent. 
The  earnings  of  vessels  engaged  in  the  foreign 
carrying  trade  probably  exceed  one  hundred 
million  dollars  a year,  of  which  less  than  one- 
third  is  earned  under  our  own  flag.” 

The  Secretary  estimates  earnings  of  freight 
money  at  $100,000,000,  a very  low  estimate. 


We  had  in  1860  70  per  cent.,  or $70,000,000 

We  had  in  1871  38  per  cent.,  or 38,000,000 


Annual  loss  in  earnings  of  shipping $32,000,000 

The  loss  of  the  business  of  building  is  at 
least  $200,000,000  — including  lumber,  labor, 
and  other  material. 

A first-class  steamer  equipped  for  freight 
and  passengers,  ready  for  sea,  costs  $800,000. 
If  built  by  the  English,  with  money  at  3 per 


cent.,  the 

Yearly  interest  on  the  same  would  be $24,000 

If  by  us,  with  interest  12  per  cent 96,000 


Excess  of  our  interest  over  theirs,  per  year $72,000 

or  about  $1,400  per  week,  or  $200  per  day,  be« 


22 


ing  the  tax  or  prohibitory  duty  in  favor  of  our 
oligarchy,  and  our  amiable  cousins  across  the 
water,  which  our  Government,  by  its  utterly 
absurd  restriction  on  our  currency,  imposes  on 
that  industry  in  particular,  as  well  as  our  coun- 
try in  general. 

One  of  our  most  distinguished  statisticians, 
Horace  H.  Day,  says : “ On  the  Clyde,  in  Scot- 
land, ships  are  built  and  fitted  out,  with  this 
indispensable  tool  (money)  to  work  with,  at  3 
per  cent.,  and  sometimes  2|  per  cent.,  while  in 
this  country,  as  I have  said  before,  everything 
measured  by  money  is  as  much  higher  in  value 
as  the  difference  in  the  legal  rates  established 
by  the  two  Governments  in  the  consols  of  the 
one,  and  bonds  of  the  other.  And  if  a ship- 
builder to-day,  in  Maine — most  of  them  are  in 
moderate  circumstances  (say  he  is  a farm-owner 
worth  thirty  thousand  dollars) — wishes  to  build 
a five  hundred  ton  vessel,  he  must  begin  by 
paying,  first,  at  least  15  per  cent,  annual  inter- 
est on  the  mortgage  of  his  farm  to  get  the 
ready  cash  with  which  to  commence  his  ship, 
and  as  he  is  not  a merchant,  keeps  no  bank 
balance,  and  hence  can  not  borrow  at  banks, 
as  he  proceeds  will  pay  20  per  cent,  per  an- 
num for  the  balance  of  the  funds  before  the 
ship  is  paid  for  (/  know  this  exact  case  to  be  the 
fact  in  Maine) ; and  this  is  not  all,  for  by  rea- 
son of  the  general  system  of  high  prices  for 
everything  in  this  country  (due  wholly  to  the 
high  rates  upon  money),  the  material  and  wages 
are  found  to-day  so  much  higher  in  the  United 
States  than  in  England  that  the  business  is  a 
losing  one,  and  hence  we  can  no  longer  build 
ships,  while  all  the  remedies  now  being  pro- 
posed in  Congress  and  elsewhere  would  only 
fail  in  producing  a healthy  result,  and  ulti- 
mately create  greater  than  existing  evils.  It 
is  this  fatal  financial  system,  born  of  war,  es- 
tablished since  and  maintained  by  the  Repub- 
lican Party,  which  deprives  the  people  to-day 
of  their  necessary  tools  (money)  to  work  with, 
and  the  whole  country  of  its  rightful  inherit- 
ance of  prosperity.” 

Effect  this  legislation,  as  England  partially 
did,  and  the  same  results  which  inured  to  her 
will  accrue  to  us,  but  to  as  much  greater  ex- 
tent as  our  natural  resources  and  position  are 
superior  to  hers. 

Agriculture,  ship-building,  and  every  other 
branch  of  industry,  will  jump  at  the  word 
“go”  Our  factories,  which  now  feel  poor  if 
not  making  semi-yearly  dividends  of  10  per 
cent.  (20  per  cent,  per  year),  would  then,  meas- 
uring themselves  by  the  Government  standard, 
be  satisfied  with  a much  less  figure. 


Their  fabrics  would  be  exported,  and  the 
nation  occupying  the  midway  position  geo- 
graphically between  the  swarming  populations 
of  Europe  and  Asia,  with  resources  superior 
to  either  and  creditor  of  both,  would  be  the 
money  center  of  the  globe.  And  now  for  the 

MORAL  ASPECTS  OF  THE  SUBJECT. 

Our  clergy  are  grieved,  astonished,  and  per- 
plexed at  the  demoralization  witnessed  in  the 
financial  walks  of  life. 

Our  citizens  abroad,  just  rid  of  the  stigma  of 
slavery,  find  themselves  facing  a national  rep- 
utation of  a more  loathsome  character. 

The  name  American  in  Europe  is  almost,  if 
not  quite,  a synonym  for  blackleg  and  swin- 
dler. 

The  reason  is  that  the  dazzling  operations 
of  the  Jim  Fisk  tribe  and  our  money  oligarch- 
ies have  so  dazzled  our  youth,  that  not  one  of 
a hundred  of  our  educated  and  enterprising 
young  men  adopt  a productive  occupation  as  a 
life-business. 

Few  will  stop  at  mercantile  business,  as  it 
is  too  slow;  no  distinction  is  made  between 
wealth-producing  and  money-getting.  Gam- 
bling is  no  longer  proscribed.  Will  any  one 
deny  that  nine-tenths  of  Wall  Street  business 
is  gambling  ? 

As  the  young  man  approaches  the  time  when 
he  must  select  his  future  occupation,  he  sees, 
or  rather  thinks  he  sees,  in  the  productive 
branches  life-long,  imbruting  toil  and  social 
ostracism,  with  no  opportunity  for  wealth  and 
distinction. 

Commercial  life  was  accepted  until  of  late,, 
but  the  labors  and  responsibilities  are  so  great 
as  compared  with  financial  life,  and  the  money 
result  so  small,  that  this  is  passed  by,  and  Wall 
or  State  street  accepted.  And  we  can  nobwon- 
der  when  we  examine  the  present  status  of 
each. 

Let  us  suppose  a young  man  with  a patri- 
mony of  $20,000.  On  examining  the  prospects 
for  commerce,  he  finds  that,  owing  to  the  high 
rate  for  money,  he  must  incur  a 


Rent  of  say $3,000 

Interest  on  $20,000  at  10  per  cent 2,000 

Clerk  hire — say  salesmen  at  $1,500  and  $1,000  — 2,500 

Book-keeper,  $1,500 ; boy,  $250  1,750 

Minimum  of  current  expenses  $9,250 


With  this  capital  and  the  above  force,  he  is  # 
fortunate  if,  at  the  end  of  the  first  five  years, 
he  has  done  $200,000  per  year,  at  an  average 
gross  profit  of  7£  per  cent.,  of  which  i or  2£ 
per  cent,  he  finds  is  in  bad  debts  and  other 
losses : 


23 


Leaving  net  5 per  cent,  or $10,000 

From  which  deduct  expenses,  as  above 9,250 

Leaving  for  his  net  profit $750 

Which  added  to  the  interest  per  year  received.. . 2,000 

Result  for  his  capital,  labor,  and  skill $2,750 


He  turns  to  Wall  Street,  finds  that  he  can 
obtain  a desk  per  year  for  $250 ; no  book- 
keeper, salesmen,  or  boy,  which  is  a saving  of 
$7,000.  Instead  of,  as  a merchant,  being  at  his 
post  at  8 a.m.,  to  be  actively  engaged  until  5 
p.m.,  his  office  hours  will  be  10  a.m.  to  3 p.m. 

In  lieu  of  laborious  and  costly  “ drumming 
up”  of  customers  and  selling  goods  on  credit 
at  7i  per  cent,  for  single  names,  he  quietly  waits 
until  paper  of  the  same  class  and  equal  merit 
is  brought  to  him,  bearing  in  addition  a first- 
rate  indorsement,  or  secured  by  undoubted 
collaterals,  which  he  can  buy,  doubly  secured 
as  above,  at  the  same  profits  as  that  for  which 
the  merchant  incurs  the  cost,  labor,  and  risk 
in  selling  goods. 

He  can  easily  do  the  same  amount  per  year, 
and  thus,  with  less  labor  and  risk,  he  obtains 


Say  7)4  per  cent,  on  $200,000 $15,000 

Add  10  per  cent,  on  his  capital  of  $20,000  2,000 


Net  results  in  Wall  Street $17,000 

“ “ outside $2,750 


The  above  are  trustworthy  estimates — out- 
side-for  commerce  and  inside  for  Wall  Street. 
So  far  he  has  been  a neophyte.  He  gradually 
learns  the  inside  track — the  mysteries  of  “ takes 
and  puts,”  “ bulls  and  bears,”  “ long  and  short” 
— corners  in  stocks,  gold  and  currency ; pur- 
chasing interests  in  leading  newspapers,  affili- 
ation with  popular  churches,  control  at  boards 
of  directors,  legislatures  of  States  and  depart- 
ments, Congress  of  the  nation.  If  a dozen  men 
can  steal  railroads,  can  not  a powerful  oli- 
garchy steal  the  republic  ? 

Can  we  wonder  that  the  teachings  of  Christ 
are  supplemented  by  those  of  Iago  — “ Put 
money  in  thy  purse.” 

WHERE  CONGRESSIONAL  APATHY  WOULD  HAVE 
LANDED  US  IN  OLD  TIMES. 

I know  of  no  evidence  showing  that  the 
fathers  of  our  political  system,  when  they  pub- 
lished the  Declaration  of  Independence  in 
1776,  had  any  idea  of  the  ultimate  form  of  gov- 
ernment that  their  action  would  result  in. 

Congress  was,  in  a manner,  a provisional  gov- 
ernment, and  in  drawing  that  paper,  acted  as 
a grand  jury,  and  indicted  their  former  affilia- 
tions as  a nuisance,  trusting  to  the  common 
sense  of  the  people  and  their  representatives  to 
meet  exigencies  as  they  might  occur. 

When  matters  had  further  progressed,  and 


the  time  to  form  the  permanent  government 
had  arrived,  they  found  that  history  recorded 
four  prominent  forms  of  government,  to  wit : 
1st,  monarchy — power  lodged  in  a single  per- 
son ; 2d,  aristocracy — power  lodged  in  a small 
number ; 3d,  democracy — power  lodged  in  the 
collective  people ; 4th,  republic — power  lodged 
with  representatives  of  the  people. 

Had  they  adopted  the  apathetic  and  reckless 
mode  of  our  late  Congresses,  instead  of  investi- 
gating the  merits  of  each,  they  would  by  com- 
mittee have  called  on  the  monarchists,  as  pos- 
sessed of  the  longest  record  and  largest  influ- 
ence, who  would  have  told  them  that  mon- 
archy was  what  they  required,  because — 

1st.  It  had  the  greatest  prestige,  its  exist- 
ence running  far  beyond  where  the  light  of 
history  could  trace  it. 

2d.  It  was  accepted  by  the  human  race 
almost  unanimously. 

3d.  It  bore  the  divine  indorsement. 

4th.  History  did  not  record  a long  existence 
of  any  other  form  of  government. 

5th.  Any  other  system  would  lack  affiliation 
with  other  nations,  and  result  in  isolation  from 
the  “ rest  of  humanity.” 

Jefferson,  Sam  Adams,  Franklin,  and  other 
statesmen  of  the  new  school,  would  not  have 
been  called  on ; but  by  button-holing  members, 
and  an  occasional  tract,  they  might  have  argued 
that  monarchy,  proceeding  from  the  family 
and  thence  through  the  clan,  was  entirely 
adapted  to  the  advance  through  savagism  and 
barbarism  to  civilization,  and,  as  a sequence  of 
its  being  best  for  those  people  and  times,  might 
not  illogically  be  claimed  as  of  the  grace  of 
God. 

That  the  failures  of  the  past  were  caused  by 
the  introduction  of  anti-republican  elements  in 
the  organizations ; by  the  undeveloped  condi- 
tion of  the  people,  and  by  the  pressure  and  in- 
vasion of  adjacent  monarchies ; that  the  educa- 
tion of  our  people  and  our  geographical  posi- 
tion were  such  that  a parallel  would  not  hold ; 
and  as  for  national  sequestration,  although 
entirely  improbable,  would,  with  our  parallels 
of  latitude  and  longitude,  have  its  benefits  as 
well  as  evils,  and  we  could  stand  it  if  the  “ rest 
of  mankind  ” could. 

These  arguments  would  have  been  consid- 
ered as  chimeras  of  visionary  and  impractical 
men,  and  the  committee  on  form  of  govern- 
ment would  have  brought  in  and  advocated 
a bill  to  establish  monarchy,  perhaps  formed 
by  the  ministers  of  George  III.,  exactly  as  do 
our  committees  on  finance  and  the  currency, 
report  in  the  interest  of  the  money  oligarchy, 


24 


and  with  about  the  same  arguments.  Perhaps 
the  chairman  of  the  committee  would  travel 
around  the  country,  assuring  the  royalists  that, 
although  the  Tom  Jefferson’s  ideas  might  pass 
the  House,  they  would  inevitably  be  choked 
off  in  the  Senate. 

Had  the  apathy  which  has  characterized  our 
legislators  of  the  last  few  years  prevailed  with 
those  of  the  Revolution,  I doubt  if  ten  votes 
for  the  republic  as  against  monarchy  could 
have  been  obtained,  and  we  should  now  be 
politically  affiliated  with  Europe  and  the  “ rest 
of  mankind.” 

We  arraign  our  national  financiers  before 
the  country  on  the  following  charges,  and 
claim  that  these  charges  have  been  substanti- 
ated on  the  preceding  pages : 

1st.  They  have,  by  abridgment  of  the  quan- 
tity of  our  currency,  hindered  exchanges  and 
diminished  production,  as  a deficiency  of  water 
would  prevent  navigation  and  stop  mill-wheels. 

2d.  They  have  caused  the  cost  of  the  use  of 
money  to  be  so  high  as  to  almost  stop  produc- 
tion. 

3d.  They  have  robbed  the  poor  man  of  his 
earnings  by  the  excess  he  was  forced  to  pay  by 
legalized  monopolies  for  use  of  money  over  the 
value  of  such  money  to  him  in  aiding  his  in- 
dustry. 

4tli.  They  have  retarded  education  by  forc- 
ing children  to  work  for  their  maintenence 
when  they  should  have  been  in  school. 

5th.  They  have  called  in  money  issued  direct 
to  the  people,  and  needed  by  them,  and  issued 
to  their  legalized  monopolies,  calling  the  issue 
indorsement. 

6th.  They  have,  to  enable  them  to  withdraw 
that  money  from  the  people,  where  it  was 
acting  in  effect  as  a loan  to  the  country  with- 
out interest,  borrowed  the  same  at  6 per  cent, 
gold  interest,  and  exempt  from  taxation — equal 
to  10  per  cent,  per  year,  and  as  per  count  5 
loaned  it  to  their  creditors  at  1 per  cent,  per 
year,  and  called  it  tax. 

7th.  They  have  reduced  the  nation’s  curren- 
cy to  one-half  that  of  France,  and  one-third 
that  of  England,  rendering  it  possible  for  their 
created  monopolies,  who  borrow  at  1 per  cent., 


to  exact  five  times  the  rate  that  foreign  indus- 
tries have  to  pay. 

8th.  They  have  ruined  rich  men  by  enticing 
them  into  reckless  speculation  and  personal 
extravagance,  while  their  capital  was  under- 
mined by  the  excess  of  interest  which  legisla- 
tion had  made  possible  over  earnings  of  in- 
dustry. 

9th.  They  have,  by  restriction  of  needed  cur- 
rency, prevented  internal  improvements,  thus 
making  the  cost  of  transportation  of  cereals  to 
the  sea-board  to  act  as  a tariff  against  com- 
merce between  the  States,  at  a heavy  cost  to 
the  producer  in  favor  of  his  foreign  competitor. 

10th.  They  have  crushed  ship-building,  in 
which  we  once  excelled  the  rest  of  the  world. 

11th.  They  have  thrown  our  carrying  trade 
into  the  hands  of  the  foreigner,  sending  the 
rich  harvests  of  freight  money  to  be  spent  in 
Europe,  or  loaned  to  us  at  double  the  rates  our 
labor  can  earn  for  it. 

12th.  They  have  nurtured  the  foreign  mon- 
opoly of  freighting  by  keeping  ours  in  abey- 
ance, resulting  in  an  advance  to  two  and  a half 
times  former  rates — and  in  gold  at  that — thus 
increasing  the  cost  of  our  products  in  foreign 
markets,  and  diminishing  earnings  of  our  pro- 
ducers. 

13th.  They  co-operate  with  our  ancient  en- 
emy, England.  She , by  her  Confederate  cruis- 
ers, annihilated  our  merchant  marine,  and  they 
make  it  impossible  for  us  to  replace  it. 

14th.  They  have  prostrated  us  as  a naval 
power,  as  an  efficient  navy  never  can  exist 
without  a merchant  marine  as  a “ nursery  for 
seamen  ” as  a precedent  condition. 

15th.  They  have  changed  our  educated  and 
intelligent  young  men  into  Wall  Street  gam- 
blers. 

16th.  They  were  the  prime  cause  of  the 
Credit  Mobilier  and  back-pay  scandal,  and  the 
general  demoralization  of  money  men  of  the 
nation. 

17th.  They  have  given  us  in  Europe  the 
character  of  a nation  of  swindlers  and  black- 
legs. 

18th.  They  have  transformed  the  temple  of 
our  liberties  into  a den  of  thieves. 


